Ecommerce services provider ChannelAdvisor’s (NYSE: ECOM) CEO David Spitz delivered a spirited pep talk to Wall Street analysts Thursday.
The Triangle born-and-grown-to-IPO company grew revenues 21 percent in 2015, topping $100 million which was at the high end of executives’ guidance.
The growth came after what one analyst called a “remix” under Spitz, After a shift in focus to larger companies, a retooling of the firm’s sales force and with an acquisition paying off, Spitz is very bullish entering 2016.
“I mean I think from a market perspective and a competitive landscape perspective, I feel pretty good. I feel better than I have in a long time about our position in the market,” Spitz said in the call, according to a transcript provided by financial news website SeekingAlpha.
“I think some of what you’re seeing in the guide is a reflection of some of the changes we made last year, really restricted certain segment of the pipeline around smaller customers, changed some pricing policies and began to focus on larger customers.”
ChannelAdvisor promoted Spitz to the CEO job from chief operating officer while co-founder and CEO Scot Wingo became executive chairman.
Seeking to lift the company to profitability, management implemented a host of changes, including a shift to a focus on larger customers rather than smaller mom-and-pops. As noted in the conference call, the 1,000 smallest ChannelAdvisor customers accounted for only 6 percent of revenues, which rose 24 percent in the fourth quarter from a year earlier to $29.4 million.
Plus, the November 2014 acquisition of E-Tale helped drive more growth.
But a key ingredient in the remix as stressed several times by Spitz was the wholesale changes made in its sales force.
After a reboot last year and with changes made in the work force to focus on larger customers, Spitz decided to immediately boost hiring of personnel to target bigger customers.
“I feel very good about the team that we’ve got in place, the enterprise team where we got the deals that we are closing on the brands and larger retailers. So, I think we are well positioned,” Spitz said.
Some sales people were moved from retail sales to what he called the “brand side” focused on bigger clients. New personnel also were hired. Last August, in a Q2 recap conference call, Spitz said he was already seeing changes beginning to pay off. On Thursday, he noted how quickly the new team was delivering results.
“I think what we’ve seen historically is that it takes 9 to 12 months for a sales rep to get fully productive. Some of these folks were folks who actually moved from our retail side to our brand side and then backfilled on the retail side,” he explained.
“So, obviously they are very well versed in business; they have to learn a little bit on the brand side but I expect them to become very productive. And then of course we hired a number of folks that are new to the business and it’ll take them a little bit longer.”
Spitz also said ChannelAdvisor was seeing less churn in its sales force, providing a blend of experience and sales scccess.
“I will point out though that one of the metrics we track here is the number of sales reps that are tenured over 24 months and that’s actually the largest number. We’ve got more of those now than we’ve had at any point in the history,” Spitz said.
“And if you go back to our restructuring last year, obviously that was focused on reps, focused on smaller customers that you can imagine that the mix of 24-month reps that are enterprise focused is also an attractive number. So, it will take some time to them to ramp, there is no doubt about it. But we do have existing reps who have been selling into the segment and I expect that these guys are going to have some pretty good successful this year.”
But there’s much more happening at ChannelAdvisor than an improved sales force. Spitz said the company would continue to invest in product development and new technology to embrace the ever-changing environment for online sales. He believes ChannelAdvisor is positioned for growth.
“I believe this business can grow significantly faster than the rate of ecommerce,” Spitz said. “I’m confident that we have the assets and the team to do that. And I think we can do that in a financially discipline way, …
“We have a whole roadmap that we’ve identified for our brands platform that we’ve allocated and hire engineering team to this year. We’ve got a lot on the docket from a road map perspective on marketplaces and digital marketing, all of the other things that we work on. So, our platform is constantly evolving, constantly picking up new capabilities.
“But I feel comfortable that as a business, we ought to be able to grow, like I said, significantly faster than ecommerce and do it in a manner that those show incremental progress over time on the bottom line in terms of profitability.”
ChannelAdvisor projects 10 to 12 percent growth in revenues this year.
Read the full conference call transcript at: