ChannelAdvisor (NYSE: ECOM) reported third-quarter results yesterday. After two good quarters to begin 2017, the third was unfortunately a disappointment. Plus, the company issued fourth-quarter guidance below analysts’ expectations. The end result is a steep decline in the stock price today.

Revenues grew 8 percent year-on-year to $30.1 million. Variable revenue continued to be the faster growing contributor to revenue compared to the fixed-fee component, with growth of 10 percent—this is roughly in line with second quarter’s 11 percent growth, excluding a one-time $600,000 revenue inflow in the second quarter.

Loss per share was $0.15 per share, compared to The Street’s expectation for a $0.05 loss. The company points to increased investments in growth spending (sales & marketing and research & development).

CEO David Spitz noted that digital marketing revenues were recovering more slowly than expected and sales in the North American region was comparatively soft after a strong second quarter. He blamed the soft performance on sales reorganization in the U.S. that despite the temporary lull will result in better productivity going forward.

Similar changes implemented in Europe and in Asia-Pacific regions were previously successful so for now we give Spitz the benefit of the doubt. International regions (23 percent of total revenue) delivered a 16 percent revenue increase (again, year-over-year unless otherwise noted) during the quarter.

Spitz promised that the similar changes occurring in North America should begin to yield improved results by early 2018.

However, for the fourth quarter, as a result of the aforementioned weak digital marketing recovery and the North American region restructuring, ChannelAdvisor gave a guidance that fell below analysts’ lowest estimates, and this is the major factor that led to the double-digit percent fall in the stock price today.

The company projects fourth-quarter revenue between $34.0 million and $34.6 million. Analysts surveyed by Bloomberg had forecasted no less than $35.0 million. This implies full-year 2017 revenue in the range of $122.4 million to $123 million.

Looking forward to 2018, ChannelAdvisor’s preliminary estimate is “low-to-mid $130 million range” but “exceeding” anticipated growth of approximately 8 percent to 9 percent for 2017. In other words, the company anticipates 2018 revenue growth of 9 percent or higher.

There are some positives to be gleamed from the results. Average revenue per customer grew 9 percent to $41,748 on a trailing-twelve-month basis and the company added 23 net customers compared to a year ago—the count excludes another 50 net new customers from the earlier acquisition of HubLogix. The number of customers with a minimum committed annual revenue of over $100,000 increased to 163, which marks an increase of 3 from the second quarter and 20 from last year’s third quarter. Recall that the company is strategically seeking to focus more on larger customers. This group of larger customers upped their commitment to $27 million, a 17 percent improvement from a year ago.

Gross merchandise volume (GMV), which measures how much merchandise is sold through a marketplace, continues to grow, including through important platforms such as Amazon and eBay. In general, the higher its customers’ GMV, the higher the revenue for ChannelAdvisor, so a growing GMV is a good thing.

China, while still a small part of the business (4 percent of revenues), is growing rapidly, and during the earnings conference call Spitz made certain to highlight the country as a market he’s particularly excited about. Chinese sales of merchandise to western channels through the likes of Amazon.com are growing and Spitz expects China to contribute more than 10 percent of sales within three years or less.

We will continue to closely monitor the company and the stock. If we see reasons to change our opinion for the stock, we will act accordingly. But at this time, the selling seen today looks to be an overreaction. Yes, the third quarter results were weaker than expected after a good start to 2017, but the company had cautioned before that the strategic changes it was making would likely take some time to fully take effect.

Due to today’s steep drop in the stock price, we reduce our suggested buy-up-to price to $11. Volatility is to be expected for small-cap stocks like ECOM. Unless we see information to indicate that the company’s fundamental positioning has deteriorated, we expect the stock to rebound.