ChannelAdvisor shares fell as much as 14percent Tuesday but rallied later in the day as investors reacted to the company’s strong earnings but disappointing guidance for the fourth quarter.
ChannelAdvisor’s plan to sell additional shares to the public, announced after the market closed Monday, also was a factor considered by investors.
Shares closed Tuesday at $36.86, down just 70cents, after trading as low as $32.27 in the morning. The company’s shares have more than doubled since the company went public at $14 per share in May.
The company attributed its better-than-expected third-quarter results in part to its expanded sales force.
“We were very pleased with our third-quarter performance, especially our continued strong pace of new customer acquisition,” President David Spitz said during a conference call with analysts.
After the markets closed Monday, the company announced that it plans to raise more capital by selling an additional 1million shares of newly issued stock to the public. In addition, unspecified shareholders are cashing in by selling 4 million shares of their stock.
Share prices typically fall after a company announces a secondary stock offering because issuing new stock dilutes earnings on a per-share basis.
ChannelAdvisor provides technology that enables retailers to integrate and manage their online sales across a multitude of sales channels. Companies also use its software to automatically advertise products on search engines such as Google and Yahoo and to promote products on Facebook.
ChannelAdvisor said Monday that it expects fourth-quarter revenue to range between $19.6million and $20million, which was in line with analysts’ estimates. But it projected a fourth-quarter loss of between 27cents and 31cents per share, versus Wall Street’s estimate of a loss of 23cents per share.
As for the third quarter, ChannelAdvisor reported revenue rose 28percent to $16.6million, versus $15.9million anticipated by analysts.
The company posted a loss of $3.8million, or 18cents per share after excluding stock-based compensation, versus a $1.9million loss a year ago. That was better than the per-share loss of 27cents anticipated by analysts.
ChannelAdvisor enjoyed a net gain of 152 customers in the third quarter, up 21percent from a year ago and giving it a total of 2,287 customers. Among the customers it added were Body Central, Claire’s Accessories, Godiva Chocolatier and Whirlpool.
In addition, average revenue per customer rose 12percent.
“We continue to benefit from a long-term secular growth trend in e-commerce, which continues to rapidly gain share of retail consumer spending,” Spitz said. “As a result, we remain optimistic about our prospects for the remainder of 2013 and beyond.”