Q1 2020 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Channeladvisor earnings Conference call. At this time, all participants are they listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on utility.
Then keypad.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your host Mr. Raiford Garrabrant director of Investor Relations. Please go ahead.
Good morning, and welcome to tell Advisors conference call for the first quarter 2025.
My name is raiford Garrabrant director of Investor Relations.
And with me on the call today, our David Spitz, Channeladvisors Chief Executive Officer.
Sylvia Channeladvisors Chief operating officer.
And rich Cornetto, Channeladvisors Chief Financial Officer.
This morning, we issued a press release with details on our first quarter 2020 performance.
As was our outlook for the second quarter 2020.
Press release can be accessed on the Investor Relations section of our website at <unk> IR Dot Channeladvisor Dot com.
In addition, this call is being recorded and a replay will be available after the conclusion of the call.
During today's call, we will make statements related to our business that maybe considered forward looking under federal securities laws.
These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date.
We disclaim any obligation to update any forward looking statements or outlook.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
These risks are summarized in the press release that we issued today.
For further discussion of the material risks and other important factors that could affect our actual results. Please refer to those contained in our most recent form 10-K.
10-Q, as well as <unk> other filings, which are available on the FCC web site at FCC Dot Gov.
During the course of today's call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA, which excludes depreciation amortization income tax expense interest and stock based compensation.
Our press release that we issued today includes GAAP to non-GAAP reconciliations for gross profit gross margin operating expenses operating income operating margin adjusted EBITDA non-GAAP net income and free cash flow.
We also provide a GAAP to non-GAAP reconciliation schedule in our supplemental financial presentation posted on the Investor Relations section of our website at IR Channeladvisor Dot com.
Finally at times in our prepared comments or responses to analysts questions. We may offer metrics that are incremental to our usual presentation to provide greater insight into that dynamics of our business or.
Our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future future with that let me turn the call over to David for his prepared remarks.
Good morning, everyone and thank you referred we'd like to officially welcome you to the team.
Let me first say that I hope everyone is doing okay. During this pandemic and our hearts go out to everyone who's been personally affected by coded 19.
And these are unprecedented times I'll keep my remarks about our first quarter results brief as I know everyone wants to hear what we've been what we've seen since quarter end as well as our outlook.
Our first quarter results were strong with revenues of 32 million exceeding our guidance for the quarter and adjusted EBITDA of 6.5 million significantly exceeding our guidance for the quarter.
The year on year revenue growth continued to improve compared to recent quarters aided in part by an acceleration in GMP driving strong variable revenue in the latter half of March as pandemic related shelter at home directives and retail store closures drove a significant share consumer spending online.
Ongoing cost controls and the scalability of our business model contributed to a significant year on year improvement in profitability as well as cash flow.
Our strong balance sheet and cash flow gave us comfort as the covered 19 crisis unfolded as I wrote in my shareholder letter on March 20 Threerd.
From an operational perspective, we activated our business continuity program in late February and implemented a temporary global work from home policy and froze travel early March in order to protect the health of our employees and support our communities efforts to slow the spread across the virus.
Our transition to work from home went very smoothly and we've experienced no operational issues related to working from home.
We set up a special Klein assistance team to help customers facing financial or operational distress and Beth will share more about that in a moment.
We are prepared to operate virtually as long as necessary and as much as we were ahead of the curve and moving to a virtual model I anticipate that we will be will be behind the curve and returning to our offices and we'll do so in a phased approach as we prioritize the safety of our employees in communities.
Cobiz 19 affected our first quarter in two ways.
On the positive side as I mentioned, we saw a broad acceleration in gross merchandise value or GMP process on our platform.
In the latter half of March which drove strong variable revenue.
Offsetting this our sales to new customers were disrupted in the last two weeks of the quarter as prospects or understandably distracted by the rapidly developing cobot 19 situation and its impact on their own operations.
We estimate this impacted our bookings by approximately 20% in the first quarter.
We also have customers like traditional department store retailers, who face financial distress as their physical retail operations have been shut down and so we anticipate that we're likely to experience an uptick in churn as some of these customers struggle to recover.
As we turn the page to April however, things really got interesting.
What was an acceleration of GMP in March became the record shattering April as a huge amount of consumer spending shifted online during the pandemic.
In fact, we exceeded a $1 billion in GMB on marketplaces in the month of April alone and even eclipsed our December 2019 volumes, which is usually our peak selling season by a wide margin.
On April 15th otherwise known as stimulus day in the U.S. due to the receipt of government stimulus direct deposits and checks we drove more GMB financings on in the less than we did on Prime day last year.
All in marketplace, GMV increased 56% year on year unequal compared to year on year increase of 15% in the first quarter illustrating the magnitude of the acceleration we've seen.
Volumes in the first few days of May have remained at elevated levels as well.
How long and to what extent this continues its really hard to side.
On the one hand as brick and mortar stores gradually reopening sheltered homeowners are lifted it is reasonable to expect that some maybe even most of this GMB will subside.
Although I think retail will be permanently altered by the pandemic and then it will take time for people to feel comfortable in store settings, especially if they're subsequent outbreaks of grown a virus.
And we can't ignore the reality the 30 million people have lost their jobs in the last few weeks in the U.S. alone many more globally.
Recessionary pressures have already started impacting reported consumer spending levels.
All that said my best guess is that the pandemic will prove to be a catalyst that drives a step function increase in ecommerce as a share consumer spending and at some level of this GMB increase we're seeing is likely to be the new normal.
Turning to sales we weren't sure what to expect that the started this quarter considering how tough the last two weeks of March where and despite a strong starting pipeline, we began by forecasting close rates at roughly 50% of normal levels.
I'm happy to report that we finished the month of April having booked almost twice what we initially forecasted and appear to be pacing close to normal close rates in so far as one month represents a trend.
After a tough finished for the first quarter of momentum returned to it in April to our sales for virtually anyway.
What we're seeing is that cobot is be has been a catalyst that is causing many companies to accelerate their digital initiatives often with a sense of urgency. This is particularly true for brands, who is retail distribution channels have been effectively halted by the pandemic into our fast tracking E commerce initiatives.
So we have several competing forces that are making the remainder of 2020 hard pressed to forecast.
One near term tailwind is strong GMB and the variable revenue, which should drive, but it's hard to know how that will play out in May June let alone the rest of 2020.
Another tailwind is that our value proposition should only be stronger as the shift to digital accelerates, especially for brands.
On the other hand, a deep global economic contraction may impact consumer demand that affect our ability to sell and may lead to increased churn as certain categories of our customers like department store retailers struggles recover.
All those factors are difficult to predict and quantify and so we feel it's prudent and appropriate to withdraw guidance for the remember remainder of the year.
That being said, we're more confident than ever in our mission to connect and optimize the world's commerce, the future of E commerce industry and that our value proposition resonates more strongly than ever.
We were able to help our customers adapt to sudden holiday like volumes without skipping a beat our business model like our platform has proven to be highly resilient and our balance sheet and profitability have given us the room to think and invest for the long term. Despite this unprecedented environment, especially in product innovation.
Having managed the business through several business cycles, including the great recession, I believe we're well positioned to lean into the current situation and with that I'll turn it over to Beth.
Thank you day, then and good morning, everyone.
I would like to start by adding my own hope that each of you are doing as well as can be expected. During this time and saying say at this situation develops.
As David mentioned in response to covert 19, we activated our business continuity program a plan designed to help manage through a variety of business critical situation as part of our plan. We have a dedicated team monitoring the situation, making decision managing communications and ensuring that we are able to continue supporting our.
Customers and business partners effectively.
Our platform as cloud based and globally distributed and is neither located in or dependent on any of our physical office locations to operate we have not experienced any distraction. In fact, we have had numerous client share their compliments on our ability to continue to support their business strategy. That's critical time this.
Since traded capability to operate effectively working from home enables us to protect employee safety and remain productive as we consider an eventual return to an office operation.
We are incredibly proud to share how we are actively working with our clients to develop strategies to enable their success at this time.
Quickly, we created a web page and active dialogues with resources to help clients navigate the pandemic sharing it our reactions and recommendations as the situation developed we are providing guidance on topics ranging from how to manage through FDA dependent to keeping pace with marketplace policy changes.
Some work to find ways to balance lower sales in brick and mortar stores. We are contributing with solutions that can enable stronger online growth.
We also initiated a program to assist customers facing financial and operational distress and to date have applied approximately $1 million and really for certain customers experiencing demonstrated hardship in the form of deferred payment plans or reduced contractual peers.
While we believe our solutions are more relevant than ever given its current situation smaller clients as well if there was substantially dependent on physical retail stores are facing significant challenges.
As a result, we are anticipating higher terminations and contraction during this period of disruption.
Let me now turn to talk a bit about how gross merchandise value or GMP is trending given current events.
Many of you have been following our blog, where our chief marketing Officer, Mike Shocker has been sharing updates on trend to each week for the last six weeks starting in late March we observe GMB growing as consumers under locked down had turned to online to source critical items. They could no longer easily accessed in store as David mentioned overall Jan.
The accelerated in late March and continue to remain elevated in April.
Driven initially by purchases of necessities like toilet paper grocery anaesthetic apparel TMB has continued to grow across a wider range of products with spikes in activity related to date of U.S. government issued stimulus checks.
Growth appears to be across the board for our marketplace channel.
We saw accelerated growth on Amazon in April over the prior three month. We also saw incredible growth on Walmart in March and more than 100% growth in April year on year.
And ebay on which we had seen some dnbi decline in 2019 and early 2020 compared to prior year period has also returned to double digit GMP growth year over year in April.
Long tail of marketplaces also enjoying can really robust GMB growth year over year in April, including Hillandale Newegg and others.
We are particularly praised please to have effectively provided our clients with uninterrupted support while working from home during this record breaking period of GMB growth.
One long term client pure formula and I are top 500 health and wellness retailer as a range of products from dietary supplements to organic foods reports it has experienced the surge in demand the client share that they used predictive analytics and relied on channeladvisors expert guidance to how poor cap demand and our digital marketing service.
Says and marketplace capabilities to get it products in front of the right consumers that the right time their success story as available on our website at Channeladvisor dotcom.
In addition, while digital marketing AD spend declined abruptly and mid to late March we saw a recovery and spending levels across all channels in April, including Amazon lumpy and Threepi as advertisers are adjusting to the current environment.
This stabilization of AD spend at another positive indicator for us and our clients.
Now that we've talked through the current environment and how it's affecting our business. Let me turn to sharing a few technology highlights from the past quarter as David mentioned, our strong financial position has allowed us to think an act strategically in the face of that pandemic and I'm pleased to report that we've made significant strides in product innovation. In addition.
To enhancing the client experience to enable their success.
Channel expansion is always a critical priority for us we further expanded our sales tracking capability to support hundreds of additional retailers by adding seven affiliates to our where to buy solution.
We had at 11, new marketplaces, enabling global expansion, including Amazon, Netherlands, and Singapore Inter Park in Korea, Kogan in Australia, and New Zealand of course, Dan Glaser in Spain, and VP in France.
In addition, we added five new one p. dropship retailers, including Costco and that's fine and enabled 10 additional locales across EMEA Asia, and the Americas supporting Facebook advertisers.
In addition, we delivered numerous new features contributed ability and seller outcome I'll share a couple of examples we continue to build technology to manage Amazon advertising, releasing day parting optimization, which automatically adjusts bidding for peak hours during the day saving advertisers both time and budget.
For all marketplace salary, we've improved lifting era resolution work flows by eliminating notifications of errors that do not impact sales basically reducing noise and enabling easier to focus on resolving those areas that truly manner.
Finally, I'd like to share an update on progress toward developing our good better best approach designed to expand our addressable market.
We successfully achieved a major milestone at the end of March by releasing our starter edition product for beta customer acquisition initial data users are providing regular feedback to shape. The final product, which is planned for general release in the second quarter to the client base of our go to market partnership station. We are encouraged by early interest.
And feedback and are very pleased by the collaboration and results to date achieved with this strategic partner.
To summarize I'm proud of how we have engaged as a company to continue operations and support our clients given the challenges of the current environment.
And the trends indicate growth in online purchasing and reinforce the need for our solutions at the market our product and engineering teams have continued to innovate actively to further arm our clients to compete while there is uncertainty I remain confident in our ability to deliver and provide relevant solutions to companies growing their ecommerce businesses and.
Optimistic about the opportunity in front of that.
With that I'll pass it to rich who will now provide a more detailed update on our financial performance rich.
Great update thank you good morning, everyone.
First I'd like to recognize and thank our finance team for their tremendous efforts during these unprecedented circumstances.
Fortunately, we were well prepared to execute on all quarter close related deliverables, which is a true testament to our strong internal controls policies and procedures.
Global impacts of the Kobin 19 pandemic are well documented the U.S. government has reacted swiftly with an array of programs to assist businesses in need.
Given our ample liquidity positive cash flows and a business model substantially based on recurring subscription revenues, we're not dependent on nor did we pursue any form of relief in the form of U.S. government backed loans such as the payroll protection program. However, we do intend to benefit from certain incentives such as penalty and interest free deferral.
Of certain tax payments in multiple jurisdictions.
So let's discuss first quarter performance. Please bear in mind consistent with historical practices. My comments regarding expenses will be on a non-GAAP basis.
Our financial results for the first quarter 2020 were strong with both revenue and adjusted EBITDA above the high end of our guidance ranges for the quarter.
We're extremely pleased with our profitability not only during the current quarter, but also over the previous trailing 12 months.
We also achieved another quarter of a strong free cash flow with a substantial improvement compared to the prior year period.
Given the current environment, where cash is king this is as important as ever and we will continue to focus our attention on managing our cash position throughout the year.
Now, let's take a closer look at these results total revenue was 32 million for the first quarter 2020 up 1% year over year up nearly 2% on a constant currency basis and up 2%, excluding our China operations.
Looking at revenue by customer type, which we looked at on a 12 trailing 12 month basis brands revenue for the 12 months ended March 30, Onest 2020 increased 16% compared to the year ago period and represented 31% of our total revenue for the period.
26% for the prior year period.
Please note we clarified our internal definition of brands customers during the first quarter and the year over year results presented have been adjusted for this change.
We're pleased with this continued shift towards brands, which is part of our longer term strategic goals because as we've mentioned in the past friends generally have a higher growth rate compared to retail customers as well as higher rates of expansions overall higher average revenue per customer and better retention.
As this friend Emeka is illustrated brands are also generally more resilient and better position when it comes to the shift to digital channels, which is why they had been a strategic focus for us over the last few years.
Retailer revenue for the 12 months ended March 31st 2020 represented 64% of our total revenue for the period.
Down from 67% for the prior year period.
First quarter fixed subscription revenue was 25.8 million, representing an increase of 1% compared to the year ago period.
First quarter variable revenue was 6.2 million, representing an increase of 2% from a year ago period.
This was the first quarter since Q3, 18, where weve seen year over year variable revenue growth.
A meaningful portion of our of our first quarter revenue beat was driven by our variable revenue performance, resulting from elevated GMB transaction volume, especially towards the end of March as David described.
From a geographic perspective revenue from the U.S. increased 1% in the quarter, representing the first quarter revenue growth in the U.S. since Q4 18.
We attribute this growth primarily from variable revenue performance as well as from brands and strategic partner revenue, but it does not yet reflect the investments we've made in the U.S. sales organization over the last two quarters.
Many of the new sales reps that we've hired in the U.S. are still progressing through training and ramp and we anticipate their productivity to start contributing to our results in the second half of 2020.
International revenue increased 6%, excluding kind of results.
Adjusted EBITDA improved substantially to 6.5 million for the quarter compared to 2.6 million in the prior year period.
Representing a 1200 basis point increase and adjusted EBITDA margin to 20.3%.
These results include improvements across all reported expense line items during the quarter.
Further adjusted EBITDA for the trailing 12 month period ended March 30, Onest 2020 totaled 24 million highlighting our continued commitment and ability to manage expenses and drive profitable growth.
Similarly.
GAAP net income experienced significant improvement coming in a $2 million for the quarter compared to a net loss of 2.3 million in the prior year period.
The strong improvement in adjusted EBITDA and GAAP net income was a direct result of our revenue growth ongoing cost discipline in our reorganization in July 2019, which was aimed at reallocating capital to make investments in sales services and support.
Enabling return to topline growth in the U.S. and further strengthen our international operations.
Turning to the balance sheet, we finished the quarter with strong results cash and cash equivalents were 56.3 million up $4.6 million during the quarter.
Free cash flow was 4.7 million for the quarter, marking a substantial improvement of $4 million from the prior year period.
Given the current economic environment, we're carefully managing our cash position each week and I'm pleased to report that cash collections have remained strong during the first quarter end through April as well.
Now, let's discuss our short and long term outlook as David mentioned, we are withdrawing our annual revenue and adjusted EBITDA guidance due to the uncertain outlook caused by the Covance 19 pandemic.
Despite the growth in GMB transaction volumes in March and April driving improved variable revenue performance, we simply cannot predict how long or to what extent. This level of GMP will continue and benefit our revenues, especially against an uncertain global economic backdrop, which will which may affect consumer spending globally and.
Addition, as David mentioned towards the end of the first quarter, we saw sales disruption and we anticipate possible increasing customer contractions in churn as certain customers confront financial and operational challenges associated with the pandemic.
For the second quarter 2020, we have some visibility as to our expected financial performance, but it too is more limited than usual.
Total revenues are encouraging based on the strong GMB trends, we've described and major can be trends have remained elevated thus far.
As such it remains very difficult to forecast whether these elevated GMB trends will continue throughout may and June and hope and how it may translate to revenues for the second quarter.
Based on our assumptions that GMB levels taper off as the quarter progresses, but still remains somewhat higher than what we saw a pre pandemic. We're issuing a revenue guidance floor of $32.5 million and then adjusted EBITDA guidance floor of $6 million for the second quarter 2020.
It is important to note that if current GMB trends were to continue throughout the second quarter, we could see variable revenue results that compare to our seasonal Q4 performance.
Despite more limited revenue visibility.
We have proven in the past that we have the ability to manage expenses through strict cost discipline.
Simply from your affects about pandemic alone we have identified cost savings from cancel shows and events elimination of travel certain facilities related expenses and certain discretionary spending.
This experience will also help drive decisions beyond 2020, as we have proven we can continue to operate successfully while working from home.
These and other opportunities can help drive continued improvement in profitability over the long term.
In closing we remain confident in the value proposition our platform brings to the market, especially in light of increasing dependency on ecommerce.
I'll now pass the call back to David for some final remarks.
Thanks, Rich I'm proud of our team for handling the last few months with incredible professionalism and such a strong focus on our customers. We know that we're fortunate to be in the right places right time. During this pandemic as it relates to E commerce, and though near term visibility is limited our mission is intact and more relevant than ever with that operator, we'd like to now.
On the call to questions.
Thank you ladies and gentlemen, if you like to ask your question. Please press Star then the number one on your telephone keypad against our wanted to ask a question.
Your first question comes from Ryan Macdonald from Needham.
Good morning, David Beth and rich Thanks for taking my questions and congrats on a on a nice quarter here.
David in particular, thanks for sharing the updates regarding the GMB trends through March and April I thought the data point, particularly around stimulus day in comparison to the Amazon was particularly interesting.
But as you're looking at the current environment can sort of supporting customers year by this deferred payments and reduce contract years can you talk about what impact that had thus far on perhaps reducing.
Customer churn or or contract cancellations in the interim thanks.
Yeah I think.
Number one it's it's a program that we implemented because we knew some other customers we're facing some distress, especially early in the pandemic.
Whether it was retail store closures or what have you and it was our view that the right thing to do is to was to work with them and try to make sure that we were being a supported as possible.
I think it's been well received I think it's probably a little bit too early to say necessary roughly.
With that what the impact is on churn I think it's going to be customer by customer some customers need a little bit more time as their operations were shutdown for example, due to.
Shutdown of their of their fulfillment facilities and then some from the have broader existential issues that reach RV on dental advisors. So.
I think a little bit early to say at this point, but but I think we're past were passed the peak of that I think I think most people are operationalized again and of course, we're seeing a essentially holiday in the middle of the spraying and its spread to most of the categories that we that we track so.
So at this point I think I think the vast majority of is fine.
That's great and then as a follow up it's great to see the bounced back in new bookings in April can you talk about what the general mix you're seeing of these new bookings are.
In terms of brands as a percent of those bookings and are you seeing any surprising pockets of strength. So from a geographic perspective as you've looked into April in early may. Thanks.
Yeah, I would say for April the majority of bookings, particularly for new customers is is with brands.
In Europe in April it was virtually all brands, which is which is interesting so.
Thank you as we've talked about before brands.
Our really haven't to evaluate the path to the consumer and what digital means for them. Obviously there is some that have been doing that for many years, but there are some but still still are very early on that lifecycle and if you're one of those late lifecycle type of brands and your your traditional distribution channel is through retailers. This has really been a wake up call right.
And I think we've accelerated frankly, probably at least five years of digital transformation.
Into the present, just because you know when when a major source of revenue goes close to zero.
Thanks, everybody up to and that's a real call to action for brands.
Great Thanks to the color.
Thanks, Brian.
Your next question comes from Matt Pfau from William Blair.
Hey, guys. Thanks for taking my questions and nice job on the quarter wanted to.
Ask about the new customers signings and I guess I'm, a little surprise that.
You haven't seen huge influx of new customers at least checking channeladvisor out as they try to build out their digital presence.
Maybe any any ideas as to why.
That has been or is it more of just the sort of pipeline or capacity thing on your side in terms of getting new customers onboard.
Yes, Hey, Ryan This is David I think we have seen.
Uptick for sure you have to remember our sales cycle is.
Typically 45 days for mid tier customers and as long as 100 to under 10 days for brands. So.
So I would say that that that in flux is still for the most part in the pipeline.
But as I just remark on the on the prior response. This has been a wake up call. This whole pandemic I think for four buttons in particular and even for certain types of retailers that needs to beef up their ecommerce initiatives. So.
So I would expect us to be to be a tailwind in terms of new customer acquisition overtime. It's just it's just early in our wholesale cycle.
Yes.
Got it and there's also been.
Categories that historically havent, maybe at great online pennant.
Duration as seeing huge upticks.
Have you seen.
Shifting the types of retailers or brands in your pipeline correlating with with some of that ship.
Dan and ecommerce penetration by category.
Yes, I think so I think you know when I call. This when I said this is a wakeup call. It really applies to practically every category right even categories. We historically, maybe haven't haven't done as much in so.
Really.
There really hasn't been any particular ecommerce category that hasn't been.
Effected in some way in terms of traditional retail. So so I expect that will continue to see this from the applicability of our solutions to the Mark.
Got it and then just one last one for rich.
On the.
Expenses in the quarter as we think about.
Modeling out the rest of the year I mean is there anything sort of one time in the expenses that you know a bit unique about the first quarter that that may sort of preferred out throughout the rest of the year or or do you sort of good baselines to use going forward.
So yeah, we did have a couple of onetime things primarily some expense reversals.
With primarily maybe some some compensation reversals in Q1 that that may have.
Contributed to the strong EBITDA performance in Q1, we've also had some employee attrition savings during Q1 that we don't want to.
Essentially depend on for the rest of the year. So I would say, mostly some expense reversals that would be onetime events in Q1.
Power, making making a point I would characterize it as incremental as opposed to you know a step function increase.
Got it and then final question for me is then on the advertising spend side of it I know there's been some pressure there.
Here at least in the first half of the air that could potentially be getting worse than a second half I.
How are you seeing does trends, especially on Amazon and Google here during keyuan in in kind of here in the first part of keep too.
Yeah. It was really interesting so in the in the middle of March when this when when this whole crisis really you know.
Engulfed us we really saw had spend drop significantly from you know even the prior two weeks and and you could sort of tell that everybody was just freezing budgets and holding spending and because I think everybody was looking over the edge of the cliffs and not sure where the bottom was right. So everybody went into cash 40 mode.
And and I would say it rebounded pretty quickly like we started to see a recovery even in March.
As click costs and things like that became you know substantially more attractive. So some of them or you know uprising customers went in and took advantage of that situation and then as we've been here in April and this was up through yesterday.
So few days into May I I pulled the latest batch of data and we've seen we've seen the stabilization of of those trends across across channels. So it feels like there was an initial before you know kind of <unk> rush for the as it's in the Middle of March a quick rebound as we got to the end of the month and and we're at relatively norm.
The levels in you know in April going into me.
Got it that's helpful. Thanks, again predict my questions and best of luck going forward.
<unk>.
Your next question comes from College, Sebastian I'm Beard.
<unk> good morning over when they were safe and healthy.
<unk> respect to the marketplaces.
Obviously, Amazon has some well publicized issues with with logistics and just shifting to central products. So.
Curious if this dynamic in the strength you've seen on Walmart ebay and maybe others is that is that a way that you can really demonstrate the value proposition of channel advisor.
As you enable merchants to shift between between platforms since I assume that's something that's happening more more frequently behind the scenes and then secondly fulfillment is certainly one of the key pain points that we're hearing from merchants in this in this current environment wondering if you.
We're seeing any increase in demand for your fulfillment services. If you could talk about the strategic partnership with Shipstation as well as to launch a starter edition. Thank you.
Yeah, Hey tell on a appreciate that.
Yeah, I think you know.
It's been really interesting right, we basically have to add a surprise holiday season here in the spring and Amazon I think is relatively neat compared to other channels in that they handle and manage so much of the fulfillment on behalf of not only themselves, but third party customers so to be honest, the fact that they've been able to.
Spin up enough and frankly effectively managed through a surprise holiday with you know a list of disruption you know, but it is to me a testament to the their operational and just they're just they're raw execution. So I think it's actually been pretty impressive what they what they've done but yeah, absolutely I think it does.
Speak to our value proposition most of our customer demands are actually seller <unk> they'll they tend to be larger customers, who who don't necessarily need to use F.B.A. or or don't need to use it exclusively and so we saw a little bit less and less of an impact on on our customers, but absolutely as you know Walmart as best made commented in her section <unk>.
Most just on fire.
You know and continues to perform really well and E. Bay also is isn't the double digits and so you know having a platform to allows customers to seamlessly so across multiple channels and automatically list and the list of things go in and out of stock, especially for our customers, who again are mostly fulfilling themselves and and therefore, they have flexibility has been.
I think a really good and those are just three other channels right. We obviously, we support something like 140 different marketplaces.
And so giving people the opportunity to reach consumers wherever they are looking you know maybe Amazon was out of stock or maybe maybe you know whatever channel without a stock.
You know really gay people, some flexibility and looking for things. So I think this will end up being an advantage for Walmart because so many people have probably shop I'm Walmart online for the first time, an experience seems like pick up and store. So I think this will be a step function for them.
As it relates to fulfillment you know I think it's it's still a little bit early too you know just given kind of our sale cycle to say definitively that yeah. One category. One product is really witnessing a a step function change in demand, but but the fact that we do have you know order orchestration in our system and the ability to to to route.
Orders two different Fusselman centres really came in key for I know at least a couple of customers that I spoke to you know maybe had different distribution centres in different states, where different locked down orders were in effect not most states allowed e. commerce with almost hunters to stay open, but but there was some confusion around that so so being able to route route orders on dynamically.
You know, it's been really positive and I do expect that that'll continue to be differentiator for US and then your last question was around Shipstation starter as best mentioned, we've we've entered our <unk> beta period with with a set of initial customers on that it's it's really pretty exciting to see it go into and to get that feedback and we anticipate.
Hearing Q2 launching into you know into the full market with with Shipstation. So it's still early Ah still getting obviously feedback from a from 80 customers, but the the critical thing for US here is it allows us to expand addressable market I [noise].
Reaching smaller customers that would that we've had to move away from over the last few years, but where there's a lot of commerce, but to do so in a very very efficient go to market model without direct sales force at a lower price point and not only serve that market, but then also [noise].
Help those customers migrate up through three to our larger platform overtime.
Great. Thank you.
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Your next question comes from the line of Thomas four K. from D.H. <unk>.
Great. Thanks for kicking my question is the first one observation to question. So that observation is the by category data you've had on your platforms them Amazing alright, very illustrative of the shift E. commerce. During the outbreak. So thank you for that second on on line.
<unk> for specific categories, such as home, which looks being say the 40% range versus the 20% range.
Apparel, what do you see is the near term stickiness of that.
Oh, we stores reopening and then second what are the implications the channel adviser on the acceleration of on line penetration across.
<unk> multiple categories I think recently you highlighted your brand.
Success with eight six thanks.
Hey, Great question I appreciate that.
We've been putting a lot of commentary out there in fact, just last night released R.R. six dump of data around category trends. So if you haven't had a chance to see it it's worth reading it because it captures a stimulus day and some other trends.
But you know we've been we've been doing a lot of that to try to be as helpful. As we can do our customers and help them understand what's going on but it's also been fascinating to watch the sort of waves of.
Buying patterns that have been have opening up your point on penetration and how durable. It is you know that's that's that's that's the big question and it's it's a little bit hard to to say at this point as long as I mentioned I think I think what we're seeing is going to turn out to be a step function increase any calmer sales I don't necessarily expect.
But the stay what are essentially holiday levels right now I think that would be that would be a surprise to me, but I think even as stores reopened.
I think all you have to do is speak to you know two different family members and ask them or they are they ready to rush back to a store a or not and I I think I think some people probably are and I think some people are probably not in a rush to go back into a traditional retail environment.
And so I think this whole this'll sorta permanently alter the landscape I think the other thing is that.
You know, they're they're a lotta people, who who's still primarily shop off line, who had been in essence forced to start shopping online.
And maybe have come to realize Wow. This is really convenient and you know and you know could be the day keep a higher proportion of their of their spending on line. As a result, this applies to other services like online grocery shopping pick up you know bottom line pick up in store or home delivery of of sins things like groceries.
So.
So I I don't know exactly where the where it all ends up on the dust settles I expect that won't be at the current holiday levels of spending but.
I do I do think that it'll be higher than it was going into this and and wearing there. It is is is kind of hard to say as as it relates to the implications for channel adviser I think it's I think it's good I think it's only good in the sense that.
You know the shift the digital I think is dramatically accelerating for a number of of companies. They're looking for robust enterprise grade solutions I mean, the fact that we've been able to scale without a blip for all of our customers for a surprise holiday season in the spring you know shouldn't be lost on people. That's you know we we.
Our our technology Liberals scale very very rapidly <unk> you know so it's very hard to counts.
And when you want to work with a partner who's trusted who's global Who's got that kind of skeptical ability and the breadth and depth of what we offer I think as as more and more companies you know put forward their digital transformation plans were exactly the kind of apartment that they should they should look for so so shifting shifting more spend online I think over time can only.
Benefit channel advisor.
Great. Thank you stay well.
Thank you dumb you too.
No further questions at this time that one now turn it back to management for closing remark.
Thank you everyone for joining us today, we appreciate your support and look forward to speaking with you again soon.
Ladies and gentleman <unk> conference. We thank you for your participation. We ask you. Please disconnect at this time.
Yeah.
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