Q3 2019 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the SPS Commerce Q3, 2019 earnings Conference call. At this time all participants are in listen only mode. After the speaker presentation. There will be a question answer session ask a question. During this session you'll need to press star one on your telephone. Please be advised that today's conference is being recorded if you recall.

There are any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today are mean, a plastic. Please go ahead ma'am.

Thank you Josh good afternoon, everyone and thank you for joining us on Sps Commerce third quarter 2019 conference call, we will make certain statements today, including with respect or expected financial results go to market the strategy and efforts designed to increase our traction in penetration with retailers and all the customers.

These statements are forward looking and involve a number of risks and uncertainties that could cause actual results to differ materially.

Please note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise.

Please refer to our FCC filings.

Specifically, our Form 10-K , as well as our financial results press release framework detailed description of the risk factors that may affect our results.

Documents are available on our website Sps commerce dot com and not the Fccs website FCC thoughts golf. In addition, we're providing a historical data sheet for easy reference on their Investor Relations section of our website Sps Commerce Dot com.

During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP earnings per share.

And our press release in our filings with the FCC each of which is posted on our website you will find additional disclosures regarding these non-GAAP and adjusted EBITDA measures, including reconciliations of these measures with comparable GAAP measures and with that I will turn the call over to Archie.

Thanks for me and welcome everyone in the third quarter 2019, we delivered strong performance ahead of our financial targets, while continuing to deliver best in class technology, and full service experience to our partners and customers across the retail supply chain.

For the third quarter revenue grew 13% to $70.9 million and recurring revenue grew 13%.

Adjusted EBITDA grew 26% to $18.1 million.

We're also proud to report that the number of recording revenue customers in the third quarter has reached over 30000, nearly three times a number of customers since we went public.

We attribute the success to the power of our network and the broad portfolio of Sps Commerce solutions.

Ecommerce and omni channel retail continue to present growth opportunities for retailers and suppliers and Sps continues to offer unmatched comprehensive solutions to doesn't need about a beady eye.

[noise] Academy Sports and outdoors is an example of a retailer who is undergoing a large retail transformation project in partnership with cognizant one of the world's leading professional services company.

Yeah, I was identified as a top priority for academy to more effectively managed through trading partnerships, including inventory management product delivery and order fulfillment accuracy.

Given the scale the project Academy chose to outsource EDI, I'd, Sps commerce, including Onboarding of new and existing suppliers.

Our continued focus on cultivating relationships with retailers and suppliers is also paying dividends in Europe .

Example, Sps is leveraging strong partnerships with sporting and leave your apparel vendors such as all the Das Puma VF Corporation clocks and darrelle in a coordinated effort to entice retailers to share their point of sale data with suppliers do that Sps analytics network more and more retailers now recognize.

The benefits of collaboration in the Omni channel World and we have seen the number European retailers in Sps analytics network more than triple since 2015.

SPS is also go to.

Well go to provider a full service <unk> international suppliers, who are looking to partner with U.S. retailers.

Humble company, a supplier eco friendly health and wellness products was founded in Sweden, and launched in the U.S. and 27 team.

To me U.S. retailers VDI requirements, the humble company partnered with Sps Commerce.

With a growing number of retailers already selling their products. The company is developing a scalable infrastructure to support them in their customers today and tomorrow.

In summary, as retailers and suppliers continue to embrace the evolution of E Commerce Omni channel retail Sps commerce is well positioned positioned to address the change management needs of trading partners around the globe, what the worlds largest cloud based retail network best in class technology and full service experience.

With that I'll turn it over to Kim to discuss our financial results. Thanks, Archie we had a great third quarter revenue for the quarter was $70.9 million at 13% increase over Q3 of last year and represented our 75th consecutive quarter of revenue growth recurring revenue this quarter grew 13% year over year.

The total number of recurring revenue customers increased 14% year over year to approximately 30500 and wallet share was about flat year over year at approximately 8800.

As a reminder, in December 2018, we announced the acquisition of called me out works at the time stated that we expect our customer count increased by approximately 2000, and a wallet share decreased by approximately $500 in 2019 due to come out work smaller average customer side.

For the quarter adjusted EBITDA was $18.1 million compared to 14.4 million in Q3 of last year.

We ended the quarter with total cash and marketable securities at approximately $201 million and repurchased approximately $6 million best <unk> shares.

In addition, the board of Directors has authorized an increase an extension of the previously announced stock repurchase program, which originally authorized the company to purchase up to $50 million of its outstanding common stock.

And now has been increased by the board to 100 million I.

Under the original program the company repurchased over $40 million through September Thirtyth.

The board also authorized an extension of the original expiration date of November 2nd 2019 to November 2nd 2021.

Now turning to guidance.

For the fourth quarter 2019, we expect revenue would be in the range of 72.2 million to $72.8 million, we expect adjusted EBITDAX, beating the range of 17.9 million to $18.4 million.

Respectfully diluted earnings per share to be approximately 19 to 20 fan with fully diluted weighted average shares outstanding of approximately 36.2 million shares.

Back non-GAAP diluted earnings per share to be approximately 20, 930 fan with stock based compensation expense of approximately $3.4 million depreciation expense of approximately $3.1 million and amortization expense of approximately $1.6 million.

For the full year, we expect revenue to be in a range of 278.6 million to $279.2 million, representing 12% growth over 2018.

We expect adjusted EBITDA to be in the range of 68.8 million to $9.3 million, representing approximately 34% to 35% growth over 2018.

We expect fully diluted earnings per share it's been a range of 87 cents to 89 cents at least I fully diluted weighted average shares outstanding of approximately 36 million shares.

We expect non-GAAP diluted earnings per share to be in a range of $1.21 to $1.23 and stock based compensation expense of approximately $14.7 million depreciation expense of approximately $11.2 million and amortization expense to be approximately $5.5 million.

For the forecast Investor should model at 30% effective tax rate calculated on GAAP pre tax net earnings.

For 2020, we will provide detailed guidance on our Q4 earnings conference call. However for modeling purposes, we expect to deliver 20% annual EBITDA dollar growth over our 2019 annual EBITDA guidance.

And at least 10% annual revenue growth over our 2019th annual revenue guidance.

In summary, Sps Commerce continues to execute on its targets proving efficiency in our business model and leveraging our growing network of strategic relationship retailers and suppliers to address a multibillion dollar market opportunity ahead of us and with that I'd like to open the call for questions.

Thank you as a reminder to ask a question you'll need to press star one on your telephone to withdraw your question press the pound Keith.

Our first question comes from Scott Berg with Needham You May proceed with your question.

[noise] IR cheating congrats on great quarter, I guess couple from me Archie you got to start off with the obligatory nacco question on everyone's mind.

With regards to your customer adds your organic customer adds in the quarter.

That would get my model, but that 660 or 670 appears to be one of your better quarters or you've seen over the last two years I guess, what do you see on their you attributing Indeed, the street doing and are you see any sort of maybe changes to the demand environment.

Yeah, I think for the quarter, we had a very strong retail corridor in the community enablement campaigns, which leads to the customer ads I think overall, Scott when I look at the retail environment I would characterize it as clearly stabilizing and we feel pretty good I don't necessarily see acceleration, but I clearly see a stabilization.

Overall, we feel environment.

Got it helpful. And then a follow up question for either of you wanted to share repurchase program.

$50 million seems to make sense, especially with the cash flow that you're generating I guess, a broader question more on on the M&A and capital structure going forward. He is to find ways to be more aggressive spend the excess cash that you're throwing out.

One off today or does the strategy that we see employed over the last nine years continue to intervene true here going forward.

Yeah, we feel that M&A standpoint.

We're trying to be extremely active but we're gonna be disciplined it needs to fit our vision a it needs to fit our criteria and we're disciplined enough to over not overpay as well, so but we continue to be aggressive an active.

But wanted to do the deals that will help us for the long term.

Yes, that's all I have them on there thanks for taking my questions.

Thank you. Our next question comes from Jason Celina with Keybanc capital markets. You May proceed with your question.

Hey, guys can hear me okay.

Yes.

Great I kind of only in its I've, one kind of long winded question, but can you just talk about a map adopt a little bit you know do you guys have any customer overlap you know any characteristics on the types of customers. They have the industry the region.

They serve and or that they compete very well thanks.

Yeah. So map of dock has been a long term partner of Sps Commerce really built the company was really built to be a partner for Sps Commerce, and it's really the last mile of integration back into the ERP system and so there was significant overlap and.

Oh overlap on that how that affects things as well.

Sure. So when you chase them when you think about the map a docking acquisition arches point, there certainly was overlap because they were a partner of ours for many years, what you would see <unk> with our financials. Amit you want to think about it from the form of the incremental so what is new I in the quarter. There was about 100 customers are they came to us from the map it off.

Acquisition, and then at the time, we announced the map it out that acquisition that we said it relatively nominal for US right now it impacted revenue by about 100000 in the quarter, but at that time. We also had provided argue as it relates to 2020, the we expect map a doctor.

Generate an incremental $2 million in 2020 in about a 1 million on the bottom line or a 1 million to adjusted EBITDA in 2020.

Great that's really great.

Thank you. Our next question comes from Kodiak Quito with Oppenheimer. Sir you May proceed with your question Oh, Thanks for taking my questions and congrats on a really nice quarter, a question for either Archie or Ken on the analytics product or I know you guys had a really good first half with analytics with a growing India kind of in the.

Mid to high single digits, I guess any sort of commentary there on the analytics I know you called out already I as a part and as a customer last quarter, where there any a good customer wins with analytics or any sort of commentary on analytics would be helpful.

Yeah, I think overall as we stayed in the past were really optimistic on analytics as far as a long term total addressable market and that has its just a matter of moving up prioritized parties for the retailers and as I've mentioned earlier, we think since our retail environment has stabilized Oh. So we're really excited about what's happening there but.

It's it's not a big not a massive change we are excited about what's happening in Europe on the analytic side again, that's really off a very small base.

So you're not going to see you know meaningful revenue changes for 2020 or 2021, but it really helps us.

In the long term revenue growth I think that we can see from that.

Thanks, Aart you for that and maybe a question for Kim on the deferred revenue, it's kind of looking at my model and I noticed that on a sequential basis, a decline and I noticed kinda, there's some seasonality there in the third quarter, usually I guess could you just walk us through some of the puts and takes there on what would cause that sort of seasonality in the deferred in this quarter.

Yeah for the most part most of our business. The deferred revenue is going to be related to the setup fees that for GAAP purposes gets recognized ratably over roughly a two year time period on the piano majority of our customers, we unveiled monthly or exceed the cash monthly so we're a little bit different.

Then maybe some other SaaS companies have to reflects on a I'm a deferred revenue so in any given quarter outside of Q1, you may see some slight differences between the short term in the long term, but nothing really of note I. In Q1, you do tend to see the deferred revenue a little bit different and that is because we do have a handful of some of our customers through.

Prior acquisition that you pay a figure in advance, but that you see reflected in the Q1 I'm a deferred revenue.

Great. Thanks for that thanks for that came appreciate it at a great quarter. Thanks for taking my questions.

Thanks Code you.

Thank you enter next question comes from Tom Roderick with Stifel. You May proceed with your question.

[noise] like him pirate she thanks for taking my questions. Ken Let me start with you just the gross margins jumped up a little bit quarter on quarter. There there it seems to be some sort of seasonality in that as well, but gradually creeping a little bit higher wondering if you can kinda talk about that trend line, how we ought to think about it going forward I'm, particularly as you wrap in.

Matt Buddakan that becomes a little bit more you know tiny bit more prominent in the numbers, but just generally speaking.

As analytics continues to perhaps do a little bit better than a then it was last year and and a map a dog sort of works its way and how should we think about the gross margins going forward here.

Sure So gross margin as long as along with our other expenses on it looking at it on an annual basis tends to be more indicative from a modeling then a in a particular quarter. However specific to answer your question specific on gross margin. This year, you'll notice that you know was up a little bit.

Higher in Q1, it was a little bit lower in Q2, I am on our earnings call last quarter I might given some color commentary to save for the back half of 2019, you should expect the gross margin to be similar to what it wasn't a fine caf of 2019, and so that's really wait and where we ended up is very in line with would that commentary.

So for the back half or this year you should expect it's similar to the front half of 19, which gets you to that to the annual expectations for gross margin, we haven't given color a detail on 2020 as an example of how you should expect or model line by line, but longer term I, we believe theres opportunity.

For continued gross margin expansion into the low to mid Seventys as we continue to scale.

Excellent and then turning to the sales and marketing line I don't know if you've got an update for a certain give us a general sense as to how the sales hiring is progressing what the sales quota carrying headcount number looks like would love to hear that if you have it and then just broadly speaking from a philosophical level Archie your Kim whoever wants to take this year as you continue to grow.

Rose double digits, 10% thought for next year.

And I look at the sales and marketing line is it's kind of flattish to even down if I look at the three quarters. This year versus three quarters last year in terms of non-GAAP expenses. How do you think that ought to Ron do you need to grow that level that grow that capacity do you have enough capacity to grow that 10% next year, just just generally its.

Speaking, how do you think about the need to add more heads to be able to continue growing 10% for next year and beyond.

Sure. So when you look at that sales and marketing and it, especially if you were to go back a couple of years, you'll see that that sales and marketing spend as a percent of revenue last year as well with into this year I'm is that a lower rate than what you saw from some of the prior years a lot of that has to do with some of the changes that we've made over the years to the sales organization.

And a simple way to think about it is we're actually getting more output or more productivity.

From our sales organization in the way that we have been organized in 18 and 19, that's working for us very well and we feel good about our capacity and our output to hit our expectations from a revenue perspective, when you think about 2020 and ongoing we.

Well of course continued to add resources as we see fit and as is necessary in order to keep up with the capacity and meet the the demands from our top line revenue fell feel good about the way we're organized feel really good about the team we have in place, but you know rest assured we're going to continue to add resources.

As appropriate to continue to go after that large opportunity in front of us.

Great. Thank you very much nice job guys.

Thank you My next question comes from David Hynes.

Canaccord you May proceed with your question.

Hey, Thanks, Thanks, very much guys can maybe just one for you as we think about kind of the drivers of growth obviously.

You know wallet share as a little bit obscured now with the Kobe land acquisition in the works is there anyway. So you can help us think about how that same store sales engine has been contributing to growth I guess I. You know is the number of retail integrations continuing to increase.

And I got that once we come out of this cobalt works impacted period, what should that wallet share growth look like.

Sure so with our business, both adding customers and then getting more and more revenue from those customers have had been important drivers to our overall business and our overall recurring revenue growth and that remains nothing is different there I to your point right now some of the metrics look a little.

But on the fact that that customer growth is showing 14% and they revenue per average refrain Roberts is about flat when you're looking at it from a year over year basis, right now and again those metrics are impacted by in particular that combine that works acquisition. So the comment that we gave at the time, we did Kobe <unk>.

Works is that that added about 2000 customers and it would have a negative impact of about $500 on that average revenue per recurring revenue customers. Just do the fact that those customers are smaller in size. So from a modeling perspective that should give you. Some information to help you figure out how you wouldn't modeling going forward our expert.

Patients are both continuing to add it more and more customers as well as have the opportunity to I've got more and more wallet share from our customers over time that both of those will be very important drivers to our overall recurring revenue.

Yeah got it Okay, you guys have clearly outperformed that 500 dollar expected headwinds I assume.

The rest of the business is outperforming.

And then and then I guess Archie Koji asked earlier about collaboration analytics greet can you just remind us how long does an instance take to stand up and so if you take already I've. For example, right like are they production now and then I guess as you get a customer like that up and running.

Are you able to leverage them for reference selling where you can go to other retailers in saying like Hey look this is the return that already I've seen from their investment you guys. You consider this two or just how does that playbook Ron.

Yes, so typically the stay on somebody up technologically we can do it extremely fast the biggest.

The biggest thing that needs to occur for a successful program is that the retailer, we really need to consult with the retailer so that they understand exactly what they're going to share and how we're going to show so that that has to be.

Well thought through and then you need a well thought through message to go out to the suppliers and then we go off the suppliers.

You literally could do it in probably a few weeks, but if you want to do it right and you want to have a lot lasting impact for the retailer and for Sps Commerce, It's probably a 90 to 120 day process.

Once we start doing that.

Enablement campaigns those suppliers are typically stood up almost immediately.

And yes, sorry, I use in production.

Yeah, and then just the reference selling piece of it I mean that does not happen or is it really just it depends on when the retailer.

Yes, the buy in around sharing their data et cetera, I mean, there's nothing really you can do to drive that.

Yeah, I mean, I think most most time it is a it is a very referenceable process and Ah, yes, but I think the flywheel of the network. The more you have in the network.

The easier it is to build to that work and that's what we're trying to do an analytics is just exactly what we did in fulfillment.

Over 18 years, it's really to try to build that network in the larger the network the more value the suppliers either more value to suppliers. He is a more likely they are to sign up.

Yep Yep, Okay makes perfect sense, all right. Thanks, guys.

Thank you. Our next question comes from Pat Walravens with JMP Securities. You May proceed with your question.

Oh, great. Thank you congratulations hey, so Archie can you you mentioned Europe having.

The European retailers wanting to access or the U.S. the European suppliers my to access the U.S. retailers can you just talk sort of at a high level what are sort of the key points in terms of how Europe is different than the U.S. for you guys and how much of your business is it today and how much can be long term.

So two different parts of the business Pat the first is at an analytics. We are you utilizing many of our large.

You asked sort of North American based suppliers to help us.

Get into.

The European retailers that market is actually more much more global and I think I think the product the product graduation, and everything else, it's very similar.

To our marketplace I.

I think as far as fulfillment, it's a little more complex because each country has its own market, we sometimes very differently.

Different.

Dynamics in each market I think long term.

I don't know this specific percentages, but I think it can be a meaningful percentage of of the business I would think we would be like most other companies the size of Europe compared to the U.S. is.

You know you could be used to be in the 30, 40% long term manner in a mature state.

And where we where we today.

So international overall is less than 10% of our revenue and Europe is just as you know a small portion of that today.

Okay, great. Thank you.

Thank you. Our next question comes from Jeff Van Rhee with Craig Hallum. You May proceed with your question [noise].

Great I'll add my congratulations thanks for taking my question just a couple for me I think first just high level. If you look at the T. M. I think you've talked of 100000, U.S. 100000 international addressable, but to date the penetrations primarily in the U.S. I think you mentioned give the numbers you're close to 30000. The question is on the remaining 70000 in the U.S., what's different about the remain.

Turning to you and then once you've already captured a ticket, but specifically in supplier size average number of connections what you might have to displace to win that business could you talk about the remaining two in the U.S. if you want.

Yeah, I think it's it's very similar to the other 30000 I think the two very different types of customers. One the smallest customers that are just starting out perhaps not doing any EDI I a lot times, we're getting those and community enablement campaigns, where.

There really are startup business and they can go from one to two to five to 10 retailers pretty quickly then I would say the other pieces really people that at <unk> Dot E.D. I for a long period of time, they have legacy software and when I think about it and when we see what we've seen is if you're a sub.

Flyer that for example has 10 15 20 retailers if you're the lesson the last year in vitamins changing the less likely yard and make a change.

When.

The best time to get them to change will be.

Obviously, if they change ERP systems, it's a brand new integration that nobody's not not a high percentage, we're going to stick with legacy software or they see that their business starts to be acquisitive or they start seeing more and more of the retailers do drop ship or they're adding retailers they realize they're gonna be.

Making it a and investment into the legacy software and that is also a natural time this to shift.

In General would you say the remaining T M and addressable suppliers.

Our our larger in size or smaller in size a than the existing base of customers.

I would say, it's pretty similar probably spent a little towards larger just because you know if you look at the history of Sps Commerce and when we went public in 2010, we really just servicing love smaller.

Smaller suppliers, so we've been at that longer than we have them in March.

Got it great and then and then last for me just on the <unk> came on the and the R&D side for looked at the non-GAAP R&D up from 5.9 to seven pretty substantial millions and millions one a sequential usually runs more linear than that can you just talk about the jump there.

Sure So R&D overtime, all in R&D, so not but not yet, but just the reported R&D as a percentage of revenue has been anywhere from about 9% to 12% given that give or take the year or the quarter, you're correct. We did see a an uptick there and that's really drug.

And by our ability to attract and a higher some great Tech talent and that's really going to be something that's going to help us going forward as we continue to focus on our our products and not you know sort of rest on our loyal to want to make sure that our overall customer experience is fabulous and we want to continue to be making some.

Modifications into our product. So we had a really strong corridor in hiring and recruiting that you see translating into the R&D.

Again still within that range of about 9% to 12% clustered around 11% this quarter, but primarily on head count related.

Okay, great. Thank you.

Thank you. Our next question comes from Tim Coso with Northland Securities. You May proceed with your question.

Yeah, Hey, I'll throw my congratulations as well just two quick question obviously for the next your initial thoughts on 20% EBITDA growth, 10% revenue gross or obviously getting some margin expansion. There should we just sort of trend line, what we've been seeing some of the last couple of years or is there something may.

You've got plan, that's a little bit different that might you might want to be aware off as were building on our models from next year. Thank you.

Sure. So if you were to look at the margin expansion in 18 as well as in 19, though that rate of that margin expansion is I was higher than what you've seen in some prior years.

And that you saw a lot of that come through the pharma sales and marketing a lot of that due to the efficiencies that I talked about a little bit earlier on this call. So what you How's the is the company's view not not the detail at this point, but it's our high level view that we provided for modeling purposes of how to think about topline and bottom line on the specifics of line by line, it's not something.

That were commenting on at this point however longer term.

Sort of time aside I, we see opportunity a in primarily really in all of the line items with basic assumption of R&D, We do think R&D as a percentage of revenue was something we we were going to be continuing to invest in off where our products features technology et cetera, but outside of that we see opportunity in classic.

So sales and marketing as well as Ci and aid to continue to scale overtime.

Okay. Good good and then how this will give them over to the product.

Jumped on the call just a touch late but the a standalone drop ship product how does that do this quarter I know last quarter. He made some comments that.

Seem to do better how did that trend into this quarter. Thank you.

Yes continues to be we don't break that out in a lot of times, it's a part of a bigger program but.

You know it continues to get traction or we continue to get meetings with retailers and it's important part of our go forward strip sales strategy.

Okay, great. Thank you very much appreciate it.

Thank you. Our next question comes from Mark Schappel with benchmark you May proceed with your question.

Hi, Thank you for taking my question and a nice job on the quarter Archie starting with you with respect to map a docs you know they had several customers outside of your core sectors of retail consumer goods. I was wondering if you expect to move all of those customers over your platform.

You know so from a customer standpoint, we plan on being very customer centric because the way we run our business for a long period of time, so those customers, we want to make well aware of the other options. They have now that they're part of the Sps Commerce family, but all those customers will have the ability to remain.

Doing business as they see fit so we're going to picked up a long long view with those customers and we think over time, we have a great product to sell them and when appropriate time is there for those customers. They will probably most likely come to Sps commerce.

Great and then with respect to future deals is it your view that there are dozens or even even maybe even hundreds of map of dock like of under his belt there.

Could be M&A candidates.

Well I would say theres dozens of acquisition opportunities for us map at OCC was a little bit unique in the fact that they completely built their business around Sps Commerce, we've had a long term.

Relationship with them, we know them.

We knew all the people very well it was one of things attracted us to them as the quality that people are the were part of rapid awkward extremely.

Strong.

And have been a positive influence on Sps and our culture and everything else. So there's there's a few but I think map it out from that standpoint was a little bit unique.

Great. Thanks, and then Kim could you just give us an update on customer churn.

Sure No no update still around 13% from a customer churn and about half that are roughly 7% on a dollar churn.

Great. Thank you that's all for me thanks.

Thank you and as a reminder to ask a question you will need to press star one on your telephone or next question comes from Matt Pfau with William Blair. You May proceed with your question.

Hey, guys. This is David on for Matt I, just had a quick question on Kobe that works I know your commentary in the past said that.

Sure migration should have finish around the end of this past quarter. So I was wondering if that migration I was completed and if there anything she likes to call out in terms of customer wins on a.

On the size of customer since they were kind of smaller customers that came over.

Yeah, we are Oh, calling it a completed transition and we view it as a very strong success story and the fact that that arc, but I think the reaction from the customers has been very positive moves into a world class platform like Sps Commerce is gonna be plus for them, we've seen some I guess.

A very small base, but we've certainly seen some upsells cross sells from there and just feel really good about acquisition in general.

Thank you. Our next question comes from David Gearhart with first analysis you May proceed with your.

Hi, Good afternoon. Thank you for taking my questions you talked a little bit about the sales and marketing the team and productivity and needing to add overtime.

You know as the business grows I just wanted to ask Tom how is the the churn within the team and the stability of the team is your churn among your sales and marketing team roughly stable or better than than it has been in the past post changes just wanted that comment and then I'd like to do a little bit of a follow up on international you had mentioned Europe and.

Growth among customers I mean analytic side, just wondering if you could give us some color on the portion of net additions that our international just a general and how international is just trending from a in addition standpoint, that's it for me. Thank you.

Yeah the turnover in.

In a sales at slightly down from the past I think we have a strong stable team. It's a very talented team I think but one thing that a the sales organization does a phenomenal job as it is training so that we have capacity and we not only have the current capacity for today.

But we're developing soc capacity for Tomorrow's, So I feel really good about that as far as.

You know Europe and international we feel really good about where we're going there.

Okay. That's it for me thank you.

[noise].

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.

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