ChannelAdvisor Corporation

Good day and thank you for standing by. Welcome to the first quarter 2022 channel advisor earnings conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during a session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would like to hand the conference over to your speaker today, Rayford Gerbrandt, Head of Investor Relations. Please go ahead.

Thank you, Victor, and good morning, everyone. Welcome to Channel Advisors Conference Call for the first quarter of 2022. With me on the call today are David Spitz, Channel Advisors Chief Executive Officer, Beth Segovia, Channel Advisors Chief Operating Officer, and Rich Cornetta, Channel Advisors Chief Financial Officer. This morning, we issued a press release with details on our first quarter 2022 performance as well as our outlook for the second quarter and full year 2022. This press release can be accessed on the Investor Relations section of our website at ir.channeladvisor.com. In addition, this call is being recorded, and a replay will be available after the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized in the press release that we issue today. For a further discussion of the material risks and other important factors that could affect our actual results, Please refer to those contained in our most recent Form 10-K, as well as our other filings, which are available on the SEC website at SEC.gov. During the course of today's call, we will refer to certain non-GAAP financial measures, all of which are reconciled in the press release that we issued today. We also provide a GAAP to non-GAAP reconciliation schedule in our supplemental financial presentation posted on the investor relations section of our website. Finally, at times in our prepared comments or responses to analyst questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to David.

Thank you, Rayford. We once again delivered strong financial results in the first quarter with revenue at the high end of our guidance range and adjusted EBITDA that exceeded the high end of our guidance range. Subscription revenue was particularly strong, increasing 17% year on year. This is a direct result of our brand's focused strategy coupled with consistent, solid execution. I'd like to now share a few of the highlights that keep us bullish about our long-term prospects and confident that we can achieve our 2025 targets of $250 million in revenue and $50 million in adjusted EBITDA. First, our focus on brands continues to pay off, with first quarter revenue from brands up 32% year-on-year to 45% of our total revenue and an all-time high of 49% of our subscription revenue. We're fast approaching the tipping point where the majority of our revenues will come from brands. Because brands are generally stickier and offer greater potential for expansion, we believe the superior unit economics we've enjoyed with brands will continue to benefit our results as they grow to represent a higher percentage of our business. Second, our strong overall subscription revenue growth helped drive total revenue to the high end of our guidance range, despite slowing e-commerce growth and a more challenging macro environment as we move beyond COVID. We view this as a testament to the durability of our revenue model. Importantly, we expect our year-on-year revenue growth to bottom out in Q2 as we finish lapping those tough year-on-year comps in the quarter and expect stronger growth in the back half of the year as the comps ease. In fact, but for the significant strengthening of the dollar in recent weeks, we would have expected a return to double-digit growth in the back half of the year and for the full year. Third, we've continued to deliver strong value to our customers through ongoing investments in our platform. Our expanding breadth of supported channels has continued to differentiate us, and that's why we maintained our rapid pace of channel expansion in Q1, and we now support over 340 channels globally. including Saks, which I anticipate has the potential to be a significant channel for our customers. Longtail GMV, in aggregate, was again larger than eBay and Walmart for us, second only to Amazon, and grew much faster than all three. Additionally, Zalando, the fast-growing European marketplace you've heard us mention before, was our third largest channel for the first time, surpassing Walmart. In addition, Seth will speak to some of the many product innovations we've recently rolled out. Fourth, cash generation remains strong in Q1, with cash up $6 million quarter-on-quarter to $107 million total. Our pristine and debt-free balance sheet and attractive returns on invested capital have allowed us to make significant investments while still delivering strong profitability and robust cash flows. Although we continue to evaluate opportunities to deploy our excess capital, we remain committed to a financially disciplined approach and focus on opportunities where we believe the potential returns align with our objectives. In closing, even as e-commerce growth rates normalize following a remarkable couple years of pandemic-driven growth, our outlook remains strong, and we are well-positioned to drive continued profitable growth. And with that, I'll turn it over to Beth.