Tradeshift - FY2023 Q1

  • The Company‘s revenue for Q1 FY2023 (February 2022 to April 2022) was $17.12 million, which is a 7% decrease from the previous quarter and a 3% decrease from the same period last year.
  • The Company’s gross profit in Q1 FY2023 was $10.55 million, which is a 12% decrease from the previous quarter and a 11% increase from the same period last year. Gross margin for Q1 was 62%.
  • The Company’s operating expenses in Q1 FY2023 were $20.07 million, which is a 2% increase from the previous quarter and a 18% decline from the same period last year.
  • Q1 FY2023 EBITDA was -$9.52 million.
  • At the end of April 2022, the Company’s cash and cash equivalents were $37.75 million.

Company Overview

Founded 2009
Sectors Supply Chain Management
Address San Jose, CA, U.S.A

Management Team

Christian Lanng Co-Founder & CEO
Mikkel Hippe Brun Co-Founder & SVP of APAC
Gert Sylvest Co-Founder & Head of Financial Technology Department
Deborah Crow Interim CFO
Raphael Bres CPO
Laurel Jamtgaard General Counsel
Marissa Mattson Chief Personnel Officer
Ryan Tate Chief Accounting Officer

Note: In April, the Company’s General Counsel Russell Joseph resigned from the Company. In his place, Tradeshift appointed new General Counsel, Laurel Jamtgaard.

Board of Directors

Christian Lanng Co-Founder & CEO
Mikkel Hippe Brun Co-Founder & SVP of APAC
Edward Shenderovich Founding Partner of Kite Ventures
Stephen Chandler Notion Capital
Noriaki Okubo Scentan Ventures
Ian Swycher Anzen Private Equity
Sumita Banerjee PSP Public Credit
Jeff Ransdell Fuel Venture Capital
Bobby Aitkenhead IDC Ventures

Current Operations

During the first quarter of the fiscal year, Tradeshift reorganized its business and product lines to better streamline operations.

Prior, the Company’s 3 main businesses were:

(1)Tradeshift Pay – an enterprise supply chain payments system;

(2)Tradeshift Buy – an enterprise supply chain procurement platform; and

(3)Network Products, which includes both Tradeshift Go – a tail-spend platform for businesses and Tradeshift Cash – a supply chain lending business.

After the reorganization,

(1)Tradeshift Pay is designated as Payment Automation, and its General Manager is the Co-founder and Senior Vice President Mikkel Hippe;

(2)Tradeshift Buy is being upgraded to a trading platform that connecting its enterprise customer’s suppliers and customers. The new platform is designated as Tradeshift Marketplace, and its General Manager is the Global VP of Commercial Growth, Greg Halko; and

(3)Network Product is designated Small Business / Fintech, and its General Manager is the Co-founder and Senior Vice President Gert Sylvest.

Corporate Structure (Subsidiaries)

America 4 subsidiaries, such as Tradeshift Inc, Tradeshift Mexico S.A. de C.V., etc.
Middle East 2 subsidiaries, Tradeshift UAE FZ LLC, Tradeshift QFZ LLC
Europe 7 subsidiaries, such as Tradeshift Network Ltd., Porta Holdings Ltd., etc.
Asia 4 subsidiaries, such as Tradeshift Asia Holdings Ltd, Tradeshift Japan Inc, etc.
Australia 2 subsidiaries, Tradeshift PTY Ltd. and Tradeshift New Zealand

Financing History

Time Round Amount($ m) Investors
2011-05 A $9 PayPal Ventures, Notion Capital
2013-01 B $28 Kite Ventures, RTP Global
2014-02 C $81 Scentan Ventures
2016-06 D $75 DCVC
2018-05 E $250 GS Growth, PSP Investments
2020-12 - 2021-12 Convertible Note $200 West River Group , Koch Industries , LUN Partners Group , IDC Ventures , Fuel Capital

Financial Analysis

(The Company’s fiscal year (FY) is from February to January of the following year. The latest financial data is of the first quarter of FY2023,which is February 2022 – April 2022 in calendar.)

During Q1 FY2023, the Company’s revenue was $17.12 million, which is a 7% decrease from the previous quarter and a 3% decrease from the same period last year.

From the revenue breakdown perspective, in Q1 FY2023, revenue from Payment Automation was $7.56 million, accounting for 44% of the total revenue, which is a 4% decrease from the previous quarter. Small Business (Fintech) revenue was $5.60 million, accounting for 33% of the total revenue, which is a 2% decrease from the previous quarter. Marketplace revenue was $2.82 million, accounting for 16% of total revenue, which has decreased 22% from the previous quarter. Professional Services revenue was $1.15 million, accounting for 7% of total revenue and decreased 1% from the previous quarter.

FY2022-FY2023 Quarterly Revenue ($’ 000)

Q1 FY2023 Revenue Breakdown($’ 000, %)

Tradeshift’s Q1 FY2023 gross profit was $10.55 million, which is a 12% decrease from the previous quarter and a 11% increase from the same period last year. Gross margin for Q1 was 62%.

Q1 FY2023 operating expenses were $20.07 million, which is a 2% increase from the previous quarter and a 18% decline from the same period last year. The main expense in the first quarter was sales and marketing expense, which accounted for 38% of the total expense and decreased by 13% from the previous quarter. General and administrative expenses accounting for 33% of the total expenses, increased 10% from the previous quarter. Research and development expenses accounted for 29% of total expenses, increased 16% from the previous quarter.

Q1 FY2023 Expense Breakdown($’ 000)

Q1 FY2023 EBITDA was -$9.52 million.

At the end of April 2022, the Company’s cash and cash equivalents were $37.75 million.

Recent Developments

Operating Metrics

During Q1 FY2023, the Company’s GMV (Gross Merchandise Volume) approached $67.9 billion, an decrease of 9% quarter-on-quarter and increased 7% year-on-year.

FY2015 – FY2023 Quarterly GMV

(in billions of dollars)

New Business

During the first quarter of the fiscal year, Tradeshift acquired a new customer in HSBC for its new Marketplace platform. The new platform will allow HSBC to flexibly manage supply chain sourcing and procurement among its clients, vendors, and partners; enable foreign exchange management, automated payments, and lending all in one central interface. Except for the Annual Contract Value, this new Marketplace deal will also bring in additional transaction-based revenue as well.

New Appointments

In April, Tradeshift appointed new General Counsel, Laurel Jamtgaard. Ms. Jamtgaard has accumulated more than 20 years of legal experience in the technology industry. Prior to Tradeshift, she served as Director of Legal and Assistant General Counsel at SAP and Ariba, respectively. Ms. Jamtgaard holds a JD from UC Berkeley and a bachelors degree from Stanford University.

Market Overview

Global Supply Chain Management Market and AP&AR Automation Market

According to Future Market Insight, the supply chain management market solutions revenue totaled up to $19.5 billion for 2020 and newly released data on the supply chain management demand outlook indicates 8.7% year-on-year growth in 2021. The overall market is expected to reach $62.6 billion by 2031, growing at a CAGR of 11.4% for 2021-2031.

According to Mordor Intelligence, the global accounts receivable automation market was valued at $1.89 billion in 2020 and is projected to be worth $3.86 billion by 2026, registering a CAGR of 12.66% during the period of 2021-2026. From a regional perspective, Asia-Pacific is expected to witness robust growth owing to the growing need for automating day-to-day operational processes.

Accounts Receivable Automation Market

Growth Rate by Geography (2020-2025)

Source: Mordor Intelligence

According to Business Wire, the global accounts payable automation market is estimated to be worth $2.5 billion in 2021 and is expected to reach $4.47 billion by 2026, growing at a CAGR of 12.3%.

Global Supply Chain Activity in 2021 Q4

According to Tradeshift’s Q4 2021 Index of Global Trade Health, total growth in global transaction volumes during Q4 remained level with the previous quarter, finishing the year with an index score of 75. Global transaction volumes between buyers and suppliers showed increasing signs of stabilizing, although spiking cases of the Omicron variant tempered the overall momentum across global supply chains, the impact has been generally far less severe than during previous waves.

Cumulative Transaction Volume Growth (orders + invoices) Indexed Against Pre-pandemic Forecast

Source: Tradeshift website

From a regional perspective, the recovery in activity across US supply chains continues to track at a significantly higher level than the rest of the world. Momentum dipped slightly in Q4, falling one point compared to the previous quarter, but an index score of 97 against a baseline of 100 (a reading of 100 indicates growth in line with expectation against historical trends) for the period means the cumulative growth in activity since the pandemic sits just 3 points below the pre-pandemic forecast.

In China, however, tough Covid prevention measures and softening local demand triggered a 10 point fall in transaction volumes against the forecast range. Q4’s Index score of 86 puts cumulative growth in Chinese supply chain activity at its lowest level since the beginning of the pandemic. A spate of lockdowns in key industrial regions across China could trigger more shortages of crucial manufacturing components and extended order backlogs in international markets.

The recovery in supply chain activity across the Eurozone stalled in Q4, dropping 8 points compared to the expected range. A 20 point quarter-on-quarter fall in invoice volumes indicates fulfilment issues remain a key concern across the region, though the overall picture is less volatile than in recent quarters. Activity across UK supply chains fell by 9 points in Q4. Demand appears high, with order volume growth remaining comfortably above the expected range, but a steep drop in invoice volumes during the quarter suggests ongoing pressures within the supplier base.

Cumulative Growth in Invoices and Orders Indexed

Against Pre-pandemic Levels

Source: Tradeshift website

Order volume growth dipped by 0.5 points in Q4, and appears to be settling after a pronounced spike in activity in Q2. The modest dip in order volumes suggests news of the Omicron variant did not spook buyers in the way that previous waves had done. The fact that invoice volume growth on Tradeshift’s platform also flattened in Q4 which suggests suppliers are still struggling to accelerate delivery cycles on orders stemming from earlier in the year.

Coupa

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2006 – United States, California

The company started as a general fee control platform. After acquiring LLamasoft at the end of 2020, the company now focus on cloud supply chain automation. The Coupa platform has a cumulative transaction volume of $2 trillion and continues to grow.

Financing History

  • Series A: $1.5M, BlueRun Ventures
  • Series B: $6M, Battery Ventures
  • Series C, $7.5M, El Dorado Ventures
  • Series D: $12M, Mohr Davidow Ventures
  • Series E: $22M, Crosslink Capital
  • Series F: $40M, Meritech Capital Partners
  • Series G: $80M, T. Rowe Price
  • Listed on Nasdaq in 2016, $133M raised

Recent News

  • In May 2022, Coupa Named a 2022 Gartner Magic Quadrant Challenger for Supply Chain Planning Solutions.
  • In June 2022, Kanika Soni has been elected to Coupa’s Board of Directors. Soni currently serves as the Chief Commercial Officer at Tripadvisor, with prior leadership roles at The Walt Disney, Tesla Motors, Gilt Groupe, and McKinsey & Company.

Basware

(NASDAQ HELSINKI: BAS1V)

1985 – Finland

The company provides enterprise software related to financial processes, purchase-to-pay and financial management services.The company has offices in 14 countries, serving more than 9,500 businesses in more than 70 countries or districts around the world.

Financing History

  • Listed on Helsinki Nasdaq in 2000

Recent News

  • In April, a consortium of Accel-KKR, Long Path and Briarwood has completed its tender offer for Basware at a total valuation of approximately EUR 619.91 million. The acquisition is expected to be completed in July 2022.

Bill.com

(NYSE: BILL)

2006 – United States, California

Using cloud technology, the company connects enterprises with their suppliers and customers, which can realize the automation of back-end financial operations for SMES. The company covers 80% of the top 100 accounting firms in the United States, with an annual transaction volume of more than $100 billion.

Financing History

  • Series A: $2.1M, DCM Ventures
  • Series B: $6.5M, Emergence
  • Venture round: $8.5M, August Capital, DCM Ventures, Emergence
  • Series C: $8.5M, Icon Ventures
  • Series D: $15.5M, Financial Partners Fund
  • Series E: $38M, Scale Venture Partners
  • Series F: $30M, Bank of America, Scale Venture Partners, Silicon Valley Bank
  • Series G: $82.5M, JP Morgan, Temasek Holdings
  • Series H: $88.1M, Franklin Templeton Investments
  • Listed on the New York Stock Exchange in 2019, $216M raised

Recent News

  • In March 2022, Bill.com appointed Rinki Sethi to the position of Vice President and Chief Information Security Officer, who served at Twitter and Rubrik Inc.
  • In May 2022, Aida Álvarez has joined the company’s board of directors. Álvarez is a former Head of the U.S. Small Business Administration. Bill.com also announced that Michael DeAngelo has joined the company as Chief People Officer.