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Form 8-K CommerceHub, Inc. For: Feb 28

February 28, 2018 4:03 PM

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 28, 2018
COMMERCEHUB, INC.
(Exact name of registrant as specified in its charter)
Delaware
001-37840
81-1001640
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(I.R.S. Employer
Identification No.)

201 Fuller Road, 6th Floor
Albany, New York 12203
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (518) 810-0700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b‑2 of this chapter).
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. [ ]
 

1



Item 2.02. Results of Operations and Financial Condition
On February 28, 2018, CommerceHub, Inc. (the “Company”) issued a press release (the “Earnings Release”) disclosing information regarding the Company’s results of operations for the three months and full year ended December 31, 2017, the Company’s financial condition as of December 31, 2017 and certain other financial and operating information.
This Item 2.02 and the Earnings Release attached hereto as Exhibit 99.1 are being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for any purpose.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No.
 
Name
99.1
 



2



SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 28, 2018
COMMERCEHUB, INC.

By:     /s/ MICHAEL TRIMARCHI            
Name:    Michael Trimarchi
Title:    Chief Financial Officer, Chief Commercial Officer
    and Treasurer

3


Exhibit 99.1
chubq417earnings_image1a01.jpg

CommerceHub Announces Fourth Quarter and Full Year 2017 Financial Results
Revenue for the fourth quarter and full year grows 12% and 11%, respectively
Net income of $3.2 million and adjusted EBITDA of $19.6 million in seasonally strong fourth quarter
Signs Macy’s as a retail drop-ship customer

ALBANY, N.Y., Feb. 28, 2018 (GLOBE NEWSWIRE) – CommerceHub, Inc. (NASDAQ: CHUBA) (NASDAQ:CHUBK) (“CommerceHub,” “we,” “us,” “our” or the “Company”), a leading distributed commerce network for retailers and brands, today announced financial results for the fourth quarter and full year ended December 31, 2017.

“We had another a strong financial performance in the quarter, with core drop-ship revenue increasing 14%, but we are most excited about the January 2018 signing of Macy’s as a new drop-ship retail customer,” said Frank Poore, CommerceHub’s Founder, President and CEO. “Macy’s is a storied retail brand with a significant online presence. This new relationship is yet another validation of CommerceHub’s role as strategic partner to many of the largest and most successful retailers online. Drop-shipping and virtual inventory are strategic initiatives at leading retailers, and CommerceHub’s superior platform, solutions and supplier network power our market-leading position.”

“The power of our business model was again on display in the fourth quarter, generating $10.7 million of operating cash flow and $10.5 million of free cash flow on $3.2 million of net income and $19.6 million of adjusted EBITDA, while adjusted EBITDA margin expanded to 53%,” said Michael Trimarchi, CommerceHub’s CFO. “Full-year 2017 total revenue of $111.1 million grew 11% year-over-year, while net income rose 8% and adjusted EBITDA increased 20%,” he continued.

Fourth Quarter 2017 Financial Highlights
Revenue was $36.7 million, a 12% increase from $32.9 million in 2016. Core drop-ship revenue was $34.4 million, a 14% increase from $30.2 million in 2016.
Gross margin was 85%, compared to 82% in 2016.
Adjusted gross margin was 86%, compared to 83% in 2016.
Net income was $3.2 million, or $0.07 per diluted share, compared to $6.0 million, or $0.13 per diluted share, in 2016.
Adjusted net income was $10.7 million, or $0.23 per diluted share, compared to $8.7 million, or $0.20 per diluted share, in 2016.
Adjusted EBITDA was $19.6 million, compared to $16.8 million in 2016.
Operating cash flow was $10.7 million, compared to $4.3 million in 2016.
Free cash flow was $10.5 million, compared to $3.3 million in 2016.
Net cash and cash equivalents at quarter end was $19.8 million.

Full Year 2017 Financial Highlights
Revenue was $111.1 million in 2017, an 11% increase from $100.6 million in 2016. Core drop-ship revenue was $102.1 million, a 13% increase from $90.4 million in 2016.
Gross margin was 81% in 2017, compared to 77% in 2016.
Adjusted gross margin was 81% in 2017, compared to 78% in 2016.




Net income was $9.9 million, or $0.22 per diluted share, in 2017, compared to $9.1 million, or $0.21 per diluted share, in 2016.
Adjusted net income was $22.0 million, or $0.49 per diluted share in 2017, compared to $17.6 million, or $0.40 per diluted share, in 2016.
Adjusted EBITDA was $45.4 million in 2017, compared to $37.8 million in 2016.
Operating cash flow was $38.1 million in 2017, compared to negative $48.1 million in 2016.
Free cash flow was $35.5 million in 2017, compared to negative $57.7 million in 2016.

An explanation of the non-GAAP financial measures discussed above is included below under the heading “Statement Regarding Non-GAAP Financial Measures.” A reconciliation of these non-GAAP financial measures to the closest comparable GAAP financial measures has also been provided in the financial tables included at the end of this press release.

Other Recent Highlights
Total customer count at December 31, 2017 was approximately 11,600, up 15% year-over-year from approximately 10,100 at December 31, 2016.
Drop-ship order volume grew 15% in the fourth quarter of 2017 and 16% for the full year of 2017, compared to the same periods in 2016.
We expanded our CommerceHub for Retailers network with the signing of Macy’s, a top 10 online retailer, as a new drop-ship customer in January 2018. This win is a conversion of an existing in-house drop-ship program, which we believe demonstrates the complexity of such programs and the value CommerceHub can deliver through increased operational efficiencies, improved customer service and capital-efficient expansion of product assortments.

Conference Call Details
The Company will offer a live conference call, and a live, listen-only webcast of the call via the CommerceHub Investor Relations website at 4:30 p.m., E.T., today, Wednesday, February 28, 2018. See http://ir.commercehub.com/events.cfm, where supporting materials, including a presentation and supplemental financial data, have been posted.
Live Call:
U.S./Canada Toll-Free Participants Dial-in Number: (800) 219-6912
International Toll Participants Dial-in Number: (574) 990-1026
Conference ID/Passcode: 5492517
Webcast (live and replay):
http://ir.commercehub.com/events.cfm

About CommerceHub:
CommerceHub is a distributed commerce network connecting supply, demand and delivery that helps retailers and brands increase sales by expanding product assortments, promoting products on the channels that perform, and enabling rapid, on-time customer delivery. With its robust platform and proven scalability, CommerceHub helped over 11,500 retailers, brands, and distributors achieve an estimated $16 billion in Gross Merchandise Value in 2017.





Important Information Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about future business strategies, future financial performance, cost savings, market conditions and potential, future growth of ecommerce, customer growth and performance, sales channel expansion and other matters that are not historical facts. These statements involve risks, uncertainties, estimates and assumptions, many of which are beyond our control, that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, market acceptance and performance of our products and services, competitive issues, general market conditions, regulatory matters and changes in law affecting our business and the risk factors described in our most recent Annual Report on Form 10-K under Item 1A "Risk Factors.” Further, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all potential risks or assess their potential effects on our business. These forward-looking statements speak only as of the date of this press release, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any such statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. There can be no assurance that any expectation or belief expressed in a forward-looking statement will occur, and you should not place undue reliance on any forward-looking statements. Please refer to our public filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, for additional information about us and the risks and uncertainties we face that may affect the forward-looking statements made in this press release.

Statement Regarding Non-GAAP Financial Measures
In addition to reporting financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), we provide non-GAAP financial measures that management considers in reviewing our financial performance because we feel they are relevant measures of the overall efficiency of our business model. These non-GAAP financial measures are not a substitute for, or superior to, and should be considered only in addition to, financial measures calculated in accordance with GAAP. They are subject to inherent limitations and exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. Certain of these adjustments are based on estimates and assumptions of management and do not purport to reflect actual historical results. In addition, you should be aware that our computation of these non-GAAP financial measures may not be comparable to other similarly titled measures computed by other companies, because all companies do not calculate these measures in the same fashion. We define “adjusted gross profit” as gross profit plus share-based compensation, acquisition-related intangible amortization and restructuring charges. We define “adjusted gross margin” as adjusted gross profit divided by revenue. We define “adjusted operating expenses” as total operating expenses less share-based compensation, acquisition-related intangible amortization and restructuring charges. We define “adjusted EBITDA” as net income or loss plus interest expense, income tax expense, depreciation of property and equipment, amortization of capitalized software costs and intangible assets, share-based compensation and restructuring charges, less interest income and income tax benefit.  We define “adjusted net income” as net income or loss plus share-based compensation, acquisition-related intangible amortization, restructuring charges and the tax effects of these adjustments, federal tax reform and other deferred charges. We define “adjusted earnings per diluted share” or “adjusted EPS” as earnings per diluted share plus the diluted per share effects of share-based compensation, acquisition-related intangible amortization, restructuring charges and the tax effects of these adjustments, federal tax reform and other deferred charges.  We define “free cash flow” as net cash provided by, or used in, operating activities less purchases of property and equipment and additions to capitalized software.  Certain of these non-GAAP financial measures exclude restructuring charges, the elimination of which does not result in a reduction of operating expenses necessary to conduct our business.  By excluding these charges, we believe these non-GAAP financial measures provide supplemental information that enables us and investors to better analyze our operating performance and the sustainability of our results and to compare our performance on a more consistent basis from period to period. A reconciliation of these non-GAAP financial measures to the closest comparable GAAP financial measures has been provided in the financial tables included at the end of this press release.

CommerceHub Investor Relations Contact
Sara Leggat
[email protected]





CommerceHub, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
Revenue
$
36,731

 
$
32,881

 
$
111,121

 
$
100,552

 
Cost of revenue
5,417

 
5,895

 
21,600

 
23,057

 
Gross profit
31,314

 
26,986

 
89,521

 
77,495

 
Gross margin
85
%
 
82
%
 
81
%
 
77
%
 
 
 
 
 
 
 
 
 
 
Research and development
6,814

 
5,796

 
25,559

 
19,187

 
Sales and marketing
1,826

 
2,310

 
8,576

 
11,334

 
General and administrative
7,634

 
7,075

 
28,920

 
30,282

 
Operating expenses
16,274

 
15,181

 
63,055

 
60,803

 
 
 
 
 
 
 
 
 
 
Operating income
15,040

 
11,805

 
26,466

 
16,692

 
 
 
 
 
 
 
 
 
 
Interest expense, net
(128
)
 
(302
)
 
(732
)
 
(434
)
 
 
 
 
 
 
 
 
 
 
Pre-tax income
14,912

 
11,503

 
25,734

 
16,258

 
Income tax expense
11,746

 
5,551

 
15,876

 
7,162

 
 
 
 
 
 
 
 
 
 
Net income
$
3,166

 
$
5,952

 
$
9,858

 
$
9,096

 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Basic
$
0.07

 
$
0.14

 
$
0.23

 
$
0.21

 
Diluted
$
0.07

 
$
0.13

 
$
0.22

 
$
0.21

 
 
 
 
 
 
 
 
 
 
Share count:
 
 
 
 
 
 
 
 
Basic
43,391

 
42,876

 
43,204

 
42,831

 
Diluted
45,864

 
44,408

 
45,230

 
44,343





CommerceHub, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
12/31/2017
 
12/31/2016
 
Assets
 
 
 
 
Cash and cash equivalents
$
19,841

 
$
6,471

 
Accounts receivable, net of allowances
21,310

 
18,109

 
Prepaid income taxes

 
4,311

 
Prepaid expenses
1,652

 
1,549

 
Total current assets
42,803

 
30,440

 
 
 
 
 
 
Capitalized software, net
2,850

 
6,716

 
Deferred services costs
4,853

 
4,989

 
Property and equipment, net
6,066

 
7,629

 
Goodwill
21,410

 
21,410

 
Deferred income taxes
5,798

 
7,714

 
Other long-term assets
1,339

 
1,122

 
Total assets
$
85,119

 
$
80,020

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Accounts payable and accrued expenses
$
3,360

 
$
2,135

 
Accrued payroll and related expenses
9,429

 
7,435

 
Income taxes payable
962

 
7

 
Deferred revenue
5,339

 
5,149

 
Total current liabilities
19,090

 
14,726

 
Deferred revenue, long-term
8,272

 
7,581

 
Other long-term liabilities
3,210

 
1,135

 
Long-term debt

 
26,000

 
Total liabilities
30,572

 
49,442

 
 
 
 
 
Equity:
 
 
 
 
Total equity
54,547

 
30,578

 
Total liabilities and equity
$
85,119

 
$
80,020





CommerceHub, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
Net income
$
3,166

 
$
5,952

 
$
9,858

 
$
9,096

 
Adjustments to net income:
 
 
 
 
 
 
 
 
Depreciation and amortization
1,754

 
2,488

 
8,032

 
9,803

 
Amortization of debt issuance costs
55

 
56

 
221

 
111

 
Share-based compensation
1,643

 
2,537

 
8,629

 
11,290

 
Deferred income taxes
5,307

 
4,311

 
3,571

 
21,326

 
Bad debt expense
338

 
(66
)
 
1,269

 
629

 
Accrued interest income

 

 

 
(273
)
 
Impairment and loss on disposal of long-term assets
100

 
19

 
310

 
179

 
Working capital changes:
 
 
 
 
 
 
 
 
Accounts receivable
(9,120
)
 
(7,993
)
 
(4,470
)
 
(2,326
)
 
Prepaid expenses and other assets
255

 
357

 
(532
)
 
(599
)
 
Income taxes, net
4,008

 
(5,114
)
 
5,266

 
(4,304
)
 
Deferred costs
45

 
168

 
136

 
(33
)
 
Deferred revenue
(366
)
 
442

 
883

 
708

 
Accounts payable and accrued expenses
811

 
(313
)
 
2,210

 
166

 
Accrued payroll and related expenses
2,722

 
1,485

 
2,718

 
1,901

 
Share-based compensation liability payments

 

 

 
(86,684
)
 
Parent receivables and payables, net

 

 

 
(9,112
)
 
Net cash provided by (used in) operating activities
10,718

 
4,329

 
38,101

 
(48,122
)
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
Purchases of property and equipment
(156
)
 
(482
)
 
(1,315
)
 
(4,995
)
 
Additions to capitalized software
(109
)
 
(582
)
 
(1,247
)
 
(4,545
)
 
Collections on note receivable - Parent

 

 

 
36,380

 
Net cash (used in) provided by investing activities
(265
)
 
(1,064
)
 
(2,562
)
 
26,840

 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
Borrowings on revolver

 

 

 
50,000

 
Repayments on revolver

 
(15,000
)
 
(26,000
)
 
(24,000
)
 
Cash paid for debt issuance costs

 

 

 
(1,100
)
 
Purchase of treasury stock

 

 

 
(3,600
)
 
Cash received from exercise of stock options
872

 
598

 
3,289

 
846

 
Cash received from employee stock purchase plan

 

 
464

 

 
Cash received from deferred stock units
75

 

 
75

 

 
Borrowings on note payable - Parent

 

 

 
28,664

 
Payments on note payable - Parent

 

 

 
(28,664
)
 
Contributions from Parent

 

 

 
6,000

 
Dividends paid to Parent and others

 

 

 
(19,730
)
 
Net cash provided by (used in) financing activities
947

 
(14,402
)
 
(22,172
)
 
8,416

 
Currency effect on cash and cash equivalents
3

 

 
3

 

 
Net increase (decrease) in cash and cash equivalents
11,403

 
(11,137
)
 
13,370

 
(12,866
)
 
 
 
 
 
 
 
 
 
 
Beginning cash and cash equivalents
8,438

 
17,608

 
6,471

 
19,337

 
Ending cash and cash equivalents
$
19,841

 
$
6,471

 
$
19,841

 
$
6,471





CommerceHub, Inc.
Supplemental Information
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
% Inc (Dec)
 
12/31/2017
 
12/31/2016
 
% Inc (Dec)
 
Revenue by type: (1)
 
 
 
 
 
 
 
 
 
 
 
 
Core Drop-Ship Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Order fee revenue
$
22,573

 
$
19,569

 
15
 %
 
$
59,788

 
$
52,095

 
15
 %
 
Subscription and other platform revenue
9,797

 
9,195

 
7
 %
 
35,224

 
32,617

 
8
 %
 
Set-up and professional services revenue
1,987

 
1,387

 
43
 %
 
7,047

 
5,692

 
24
 %
 
Total core drop-ship revenue
34,357

 
30,151

 
14
 %
 
102,059

 
90,404

 
13
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand channel revenue
2,374

 
2,730

 
-13
 %
 
9,062

 
10,148

 
-11
 %
 
Total
$
36,731

 
$
32,881

 
12
 %
 
$
111,121

 
$
100,552

 
11
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drop-ship order count growth
15
%
 
16
%
 
 
 
16
%
 
16
%
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
(1) In the fourth quarter of 2017, we updated the way in which we present revenue by type. To provide additional clarity over this change, we have provided supplemental revenue disclosures at the end of this earnings release to disclose our historical revenue by type for the periods presented above, as well as amounts previously reported that conform to our current presentation of revenue by type.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
 
 
12 months ended:
 
 
 
 
12/31/2017
 
12/31/2016
 
 
 
12/31/2017
 
12/31/2016
 
 
 
Share-based compensation:
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
$
97

 
$
105

 
 
 
$
396

 
$
(102
)
 
 
 
Research and development
341

 
564

 
 
 
1,728

 
2,261

 
 
 
Sales and marketing
5

 
130

 
 
 
553

 
834

 
 
 
General and administrative
1,200

 
1,738

 
 
 
5,952

 
8,297

 
 
 
Total
$
1,643

 
$
2,537

 
 
 
$
8,629

 
$
11,290

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




CommerceHub, Inc.
GAAP to Non-GAAP Reconciliations
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP gross profit to adjusted gross profit:
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
Gross profit
$
31,314

 
$
26,986

 
$
89,521

 
$
77,495

 
Share-based compensation
97

 
105

 
396

 
(102
)
 
Acquisition-related intangible amortization

 
188

 

 
750

 
Restructuring charges (1)
246

 

 
486

 

 
Adjusted gross profit
$
31,657

 
$
27,279

 
$
90,403

 
$
78,143

 
 
 
 
 
 
 
 
 
 
Adjusted gross margin
86
%
 
83
%
 
81
%
 
78
%
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Reconciliation of GAAP operating expenses to adjusted operating expenses:
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
Operating expenses
$
16,274

 
$
15,181

 
$
63,055

 
$
60,803

 
Share-based compensation
(1,546
)
 
(2,432
)
 
(8,233
)
 
(11,392
)
 
Acquisition-related intangible amortization

 
(250
)
 

 
(1,000
)
 
Restructuring charges (1)
(957
)
 

 
(1,793
)
 

 
Adjusted operating expenses
$
13,771

 
$
12,499

 
$
53,029

 
$
48,411

 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Reconciliation of GAAP net income to adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
Net income
$
3,166

 
$
5,952

 
$
9,858

 
$
9,096

 
Interest expense, net
128

 
302

 
732

 
434

 
Income tax expense
11,746

 
5,551

 
15,876

 
7,162

 
Depreciation and amortization
1,754

 
2,488

 
8,032

 
9,803

 
Share-based compensation
1,643

 
2,537

 
8,629

 
11,290

 
Restructuring charges (1)
1,203

 

 
2,279

 

 
Adjusted EBITDA
$
19,640

 
$
16,830

 
$
45,406

 
$
37,785

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
53
%
 
51
%
 
41
%
 
38
%
 
 
 
 
 
 
 
 
 
 
(1) Restructuring charges include termination and retention benefits and the impairment of certain capitalized software projects in connection with our 2017 restructuring plan.




CommerceHub, Inc.
GAAP to Non-GAAP Reconciliations, continued
(in thousands except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP net income to adjusted net income:
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
Net income
$
3,166

 
$
5,952

 
$
9,858

 
$
9,096

 
Share-based compensation
1,643

 
2,537

 
8,629

 
11,290

 
Acquisition-related intangible amortization

 
438

 

 
1,750

 
Restructuring charges (1)
1,203

 

 
2,279

 

 
Tax effect of adjustments (2)
(1,794
)
 
(240
)
 
(5,218
)
 
(4,557
)
 
Tax effects of federal tax reform and other deferred tax charges (3)
6,437

 

 
6,437

 

 
Adjusted net income
$
10,655

 
$
8,687

 
$
21,985

 
$
17,579

 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP earnings per diluted share to adjusted earnings per diluted share:
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
GAAP earnings per diluted share
$
0.07

 
$
0.13

 
$
0.22

 
$
0.21

 
Share-based compensation
0.04

 
0.06

 
0.19

 
0.25

 
Acquisition-related intangible amortization

 
0.01

 

 
0.04

 
Restructuring charges (1)
0.03

 

 
0.05

 

 
Tax effect of adjustments (2)
(0.04
)
 
(0.01
)
 
(0.12
)
 
(0.10
)
 
Tax effects of federal tax reform and other deferred tax charges (3)
0.14

 

 
0.14

 

 
Adjusted earnings per diluted share
$
0.23

 
$
0.20

 
$
0.49

 
$
0.40

 
 
 
 
 
 
 
 
 
 
Diluted share count
45,864

 
44,408

 
45,230

 
44,343

 
 
 
 
 
 
 
 
 
 
(1) Restructuring charges include termination and retention benefits and the impairment of certain capitalized software projects in connection with our 2017 restructuring plan.
 
(2) Adjusted earnings per diluted share assumes a tax rate of 40%.
 
(3) Represents the effects from the change in federal effective tax rate from 35% to 21%, which resulted in a charge to deferred tax expense, as well as the effect of a deferred tax charge associated with a 162(m) adjustment recorded in the fourth quarter of 2017.
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP net cash provided by (used in) operating activities to free cash flow:
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
12/31/2016
 
Net cash provided by (used in) operating activities
$
10,718

 
$
4,329

 
$
38,101

 
$
(48,122
)
 
Purchases of property and equipment
(156
)
 
(482
)
 
(1,315
)
 
(4,995
)
 
Additions to capitalized software
(109
)
 
(582
)
 
(1,247
)
 
(4,545
)
 
Free cash flow (1)
$
10,453

 
$
3,265

 
$
35,539

 
$
(57,662
)
 
 
 
 
 
 
 
 
 
 
(1) Includes share-based compensation liability payments of:
$

 
$

 
$

 
$
(86,684
)




CommerceHub, Inc.
Supplemental Revenue Information
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Historical presentation of revenue by type:
 
 
 
 
 
 
 
3 months ended:
 
12 months ended:
 
 
12/31/2017
 
12/31/2016
 
% Inc (Dec)
 
12/31/2017
 
12/31/2016
 
% Inc (Dec)
 
Revenue by type:
 
 
 
 
 
 
 
 
 
 
 
 
Usage revenue
$
27,751

 
$
24,661

 
13
%
 
$
75,996

 
$
69,098

 
10
%
 
Subscription revenues
6,933

 
6,737

 
3
%
 
27,759

 
25,503

 
9
%
 
Set-up and professional services
2,047

 
1,483

 
38
%
 
7,366

 
5,951

 
24
%
 
Total revenue
$
36,731

 
$
32,881

 
12
%
 
$
111,121

 
$
100,552

 
11
%

Revenue by type for previously reported periods under current presentation:
 
 
 
 
 
 
 
 
 
 
 
 
 
3 months ended:
 
9/30/2017
6/30/2017
3/31/2017
12/31/2016
9/30/2016
6/30/2016
3/31/2016
12/31/2015
9/30/2015
6/30/2015
3/31/2015
Revenue by type:
 
 
 
 
 
 
 
 
 
 
 
Core drop-ship revenue:
 
 
 
 
 
 
 
 
 
 
 
Order fee revenue
$
12,276

$
12,901

$
12,038

$
19,569

$
10,900

$
11,227

$
10,399

$
17,070

$
9,414

$
9,683

$
9,102

Subscription and other platform revenue
8,544

8,432

8,451

9,195

8,053

7,827

7,542

7,728

6,767

6,529

6,474

Set-up and professional services revenue
1,713

1,622

1,725

1,387

1,431

1,491

1,383

1,238

1,106

1,055

894

Total core drop-ship revenue
22,533

22,955

22,214

30,151

20,384

20,545

19,324

26,036

17,287

17,267

16,470

 
 
 
 
 
 
 
 
 
 
 
 
Demand channel revenue
2,081

2,253

2,354

2,730

2,094

2,558

2,766

3,235

2,408

2,591

2,320

Total
$
24,614

$
25,208

$
24,568

$
32,881

$
22,478

$
23,103

$
22,090

$
29,271

$
19,695

$
19,858

$
18,790

Drop-ship order count growth
15
%
17
%
18
%
16
%
16
%
15
%
14
%
 
 
 
 


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