Q1 2020 Earnings Call
[music].
Leasing gentlemen, thank you for standing by and looking for the F.B.S. Commerce. He won 2020 earnings golf at this time on participant lantern the listen only meant Peter looking dumb question and answer session and instructions will follow at that time.
If you should make a few stunts turned the conference expressed dogs ever on your telephone keypad.
As a reminder, this conference is being recorded.
I was on like teleconference over do you speak today for me that <unk> give me the can.
Thank you blow, but afternoon, everyone and thank you for joining us on S.P.S. Commerce first quarter Twentytwenty conference call, we will make certain statements and projections today, including with respect to expect the financial results go to market strategy and efforts designed to increase our traction and penetration with retailers.
The customers.
These statements and projections are forward looking and and all the number of risks and uncertainties that could cause actual results to defer materially. We note in particular that uncertainty regarding the impact of cold that 19 pandemic honor performance could cause actual results the different materially from our projections.
Note that these forward looking statements reflect our opinions only has up to date of this call and we undertake no obligation to publicly upstate a revised any forward looking statements, whether as a result of new information future events or otherwise.
Please refer to R.S.P.C. filings, specifically, our form 10, k. as well as our financial results press release, we furnished to be a form eight k. to the S.P.C. earlier today Fray more detailed description of the risk factors that may affect our results.
These documents are available on our website F.B.S. commerce dot com not the S.P.C.'s website S.C.C. Dotcom. In addition, we're providing a historical data sheet for easy reference on our Investor Relations section of our website S.B. a stomach commerce dot com.
During our called today, we will discuss adjusted financial measures and non gap earnings per share in our press release, and our filings wickets S.P.C. each of which is close it on our website. We will find additional disclosures regarding these non gap and adjusted EBITDA measures, including reconciliation stuff these measures with comparable <unk>.
Measures and with that I will turn to call over two Archie.
Thanks for me now and welcome everyone first and foremost, we hope you're all staying safe and well and our thoughts are with everyone affected by the current a virus pandemic.
The health and safety of our employees customers and partners is a top priority and we remains fully committed to support the suppliers and retailers that serve our communities in these challenging times.
I feel calmer services are absolutely critical to our customers to ensure they are able to deliver the day to day essentials, we all need.
We are cloud native company and the investments we have made over the years in our tools systems and processes enable us to deliver uninterrupted and secure service anywhere in the world often with nothing more than a web browser.
Due to the nature of the Sass business model were able to operate remotely providing a full service experience to existing customers and promptly onboarding new suppliers as needed.
For the first quarter revenue grew 11% $74.2 million recurring revenue group, 12% and adjusted to you, but I grew 24% to $20.4 million.
S.P.S. Commerce provides a mission critical service to suppliers and retailers at a time when E. commerce has become a central to their business.
We recently engaged with U.S. foods, a leading food service distributor about leveraging 80, I and automating their supply chain.
As covert 19 started it started to disrupt operations in the food industry U.S. foods realize there's electronic processes are critical to maintain affect the business operations.
Identified E.D.I. as a crucial component in this process requiring all of their suppliers to move to electronic order fulfillment.
And a matter for weeks Sps Commerce has signed on more suppliers to Tranzact 80, I with U.S. Foods, then they have on their own over the last 10 years.
U.S. foods have also formed grocery sector partnerships, enabling it to deliver product directly tour retailers distribution center or stores.
These new partnerships further emphasized the need for supply chain efficiencies kelp retailers across the United States maintain inventory and meet increasing consumer demand.
Many of the retailers, we work with our expanding on their multi channel sourcing strategy Camille increasing demand.
Costco for example has regularly been using S.P.S. per same day Bender setup.
And has relied on us over the past too few weeks to add approximately 200 new vendors.
To their network and ensure their up and Ronnie fell costs schools orders within hours.
We have also been working with Walgreens Onboarding, new critical suppliers of essential products such as face masks.
With our full service the same day Onboarding capabilities Sps eight was able to increase speed the market for a variety of critical products from new suppliers.
[noise] stay at home government directives have also caused it or <unk> abrupt decline in brick and mortar sale retail sales and the shifty online shopping.
E. Commerce is now an integral and sometimes necessary part of our lives, prompting retailers to evaluate their operational efficiencies and quickly adapt to stay relevant.
That's.
As part of S.P.S. Commerce fulfillment.
We launched Courier service to help suppliers managed drop ship borders helping them save time with functionality like batch processing and reduce costs, which rate shopping capability for all major carriers in the U.S.N. Canada.
Carrier service, which was just launched in March is being used by our customers to fill fulfill orders for Amazon Cosco home depot bed Bath neon and target.
We are pleased with the products acceptance to date.
As we strive to support our trading community in this challenging environment.
We expect the current dynamics impacting retailers from suppliers will continue to amplify the need for process automation Nsps commerce is committed to support and improve trading partner relationships in every way we can.
We're also mindful of economic impacts of the covert 19 pandemic and uncertainty around its implications across the retail landscape.
SPS Commerce has a very large network a trading partners across various industries, and we see retailers and suppliers adapting implementing e. commerce capabilities to serve rapidly evolving consumer demand.
Across our network and diverse and markets, we have seen a steady volume of transactions since March with approximately half of our network C. increase volume.
While some have experienced a decline.
The dynamics of the situation continued a ball.
At this time, we are seeing increased demand for automation from retailers embracing e. commerce and implementing drop ship capabilities.
Oh exposure to the grocery <unk> supply chain has resulted in an increase in onboarding of new suppliers for retailers as well as food service Eddie grocery distributors.
These are to dynamics to drive demand for S.B.S. Commerce solutions, and we are optimistic about the long term opportunities as we continue to support our growing network of over 31000 trading partners.
As we look at the rest of 2020 this uncertainty around the duration when the magnitude the pandemic and it's growing impact on the economy. We're factoring in the possibility of continued pressure on retailers I decline in demand for our solutions, such as analytics and a push out in enterprise ear P. implementations.
All of which would negatively impact our business.
These are dynamics, we cannot protect predict or control, but with our cloud native operational model, where well positioned to provide support our customers partners and our community.
In summary, SPF continues to be a mission critical aspect of the global supply chain, our vision to be the world's retail network is being realized.
Our retail supply chain solutions are keeping trading partners connected, especially now during this time of crisis and destruction.
The work, we do is vital and I would like to think all of our employees for an ongoing commitment to supporting our customers and ensuring business from supply continuity for our communities.
We achieved our 10th year as a public company in April and based on our history of consistent execution, an ongoing focus on our customers needs.
We believe Sps commerce will emerge from this crisis stronger than ever.
With that I'll turn it over to keep them to discuss our financial results.
Thanks, Archie we can live in a solid first quarter of 2020 revenue was $74.2 million, 11% increase ever Q1 of last year and represented are 77 consecutive quarter of revenue growth.
<unk> this quarter grew 12% year over year.
The total number of recurring revenue customers increase 5% your every year to approximately 31000.
Q1, while it shared with up 6% year over year at approximately 9100.
For the quarter adjusted D., but that was $20.4 million compared to 16.5 million into one of last year.
We ended the quarter with total cash and marketable securities at approximately $215 million, we also repurchased $12 million of S.P.S. shares in the choir.
Now turning to guidance and second quarter 2020, we expect of revenue to be in the range of 73.8 million to $74.8 million.
<unk> being a range of 19 million to 20 million respectfully deluded earnings per share to be approximately 17 to 19 cents with fully deleted weighted average shares outstanding of approximately 36.2 million shares we expect noncapitalized it earnings per share to be approximately 29 to 31, Sir well stocked this compensation expensive approximately 5.1 million.
Appreciation expensive approximately 3.5 million any amortization expense of approximately $1.4 million.
As a result of the government mandated office closures and reduce travel we are recognizing saving them will continue to manage discretionary spending accordingly, given I'm going to uncertainties, resulting from them 10 Downing.
However, we're in a unique position to expand our market presence and we will continue to invest in product innovation to advance our technology leadership and continue to deliver the best customer experience.
We are withdrawing 2020 annual guidance due to one certain key related to the macro economic impact the pandemic and the lack of visibility into the magnitude of the impact on our retail network.
Dynamics that mean negatively impact our business include prolonged store closures bankruptcy reduce demand for analytics product and potential push out in E.R.P. migration.
Dynamics that may positively impact our business include increased or enabling campaign activity driven by current E. commerce friends, including demand for our dropship product.
We will continue to monitor the macro economic impact on retail dynamics and reassess our visibility for the full year at the end of the second quarter.
However, given our history of strong operating leverage and the resilience of our staff model, we remain competent and our ability to expand adjusted eat at the margin and 2020 and achieve our long term adjusted EBITDA margin target a 35%.
Although we are withdrawing guidance for the year, we are providing the following information from modeling purpose, we expect stock based compensation expense for the year of approximately $19.7 million depreciation expensive approximately $13.8 million and amortization expense of approximately $5.6 million.
Also for the remainder of the year on a quarterly basis, and that's or should model, a 30% effective tax rate calculated on gap pretax net earnings.
In summary, we expect that the current supply chain dynamics will amplify the need for E. Commerce and E.D.I. solutions in the long term and we believe S.P.F. commerce is uniquely positioned to capitalize on that opportunity. We are pleased with our ability to continue to provide mission critical solutions to retailers and suppliers and we'd like to thank all our employees for their.
Effort and dedication to support the S.P.F. Commerce network in these challenging times would that I'd like to open to call to questions.
Ladies and gentlemen, if you have a question that this time. Please press. The Star then the number 100 touched on telephone.
Trick question, that's been answered for your reached to remove yourself from the queue <unk>.
The first question comes from the line of my Oh from room there.
You guys. Thanks for taking my questions and hope you're all dealing well one to ask on the new product you introduce on the on the carrier service. Maybe you can just tell us about the other monetization model for that works and is there an opportunity to expand that to.
Two more retailers.
Yeah. So.
The the product is an add on product for fulfillment.
And it's a modest monthly fee.
And it does two things one it greatly simplifies.
The whole process.
Tying your A.S.N.
Through your shipping documents and also rate shopping so just simplifies that process and decreases the amount of manual effort, which is a great value. So I think there's two big parts of it one it's a it's a potential add on.
Our customers. So we can have you get more money, but it's also.
Retention tool and the fact that obviously the more value we can generate for our suppliers the more likely they are to stay with us and it makes it very difficult for them to go somewhere else and yes, we continue to build up a network and we're building up the network as fast as people need need the solution again, it's a new solution.
Back to habit to basically any any any enough our entire retail network.
Right and then I guess, just generally there's going to be a lot of supply chain related changes coming out of the pandemic. So you know how do you think about that in terms of creating additional opportunities for for more products.
Be created for your portfolio.
Well I think I think a lot of it we are set up extremely wow with product. Obviously has yeah more more usage you see more opportunities, but I think you know we're seeing drop ship activities kind of double triple overall now for some retailers are up 200% for some retailers up 1000 per cent.
So we're seeing significantly more.
Obviously more drop ship opportunities of the.
350, or so retailers it uses for drop shipping or the spiders uses for adoption sort of seeing more opportunity. There. We're seeing you know one of the dynamics of happened.
In 2009 number 2009 was a very challenging retail environment and our community product actually has increased sales and we went public off our 2009 numbers. So we're seeing that the whole need for an efficient supply chain electronic supply chain.
Simple things like going into the office to get mail or not wanting to how 'bout packing slip.
On the box it comes in a distribution center, because you don't want somebody to touch it.
So the efficiencies we were very optimistic on that front and I think we'll continue to evolve and but I think we're very well positioned right now.
Great. Thanks for taking my questions guest.
Here next question comes from the line of Scott Bird from U. Penn.
[noise], Hi, Archie Kim I congratulate butter, thanks for taking my questions.
I guess a couple of here aren't she.
Started touching on it in the last question a little bit differences between you know the great recession in the current environment that were and what else is different for the business. Today. Obviously you are not more of a hypergrowth mode that it's still very early in the film it as a cloud kind of stage today 12 years later, certainly more mature you have a much.
Different position in the ecosystem yup, what are the maybe puts in polls that are kind of different or or or other process that you're lucky it today.
Well I think there's a couple things one 2008 2009, there was no health crisis.
Wasn't an emotional time it wasn't a time for as much of a time for empathy. So that's a completely different and then.
We we had everybody in the office and so we didn't have 1500 people working remotely across the globe and there's some there's some positives and negatives with that so those are the.
And like 2008 2009, we didn't know we didn't know how long and economics, we're going to last week. We again don't know how this is going to play out either is it.
Is this a v. a is at a w. is and how long does it take I don't know.
Business is very different in 2009, we only had very small suppliers and we only had community.
And the dynamic there we saw.
Was that.
We saw community need and we're a little flat footed increase pretty drastically and we saw bankruptcy's pick up a pointer to the costs was appointed to one on revenue, but 2009 actually was a year of accelerated growth.
He didn't have we also didn't have analytics and we didn't have any enterprise accounts.
To ear piece system, so that business just didn't exist for us.
So.
We don't really have a track record of knowing what's gonna happen. There you know the pipeline look reasonable that looks good but I don't know how they're going to behave.
I find is gonna be even normal way or when we come to a quarter and our things going to get pushed that's the biggest.
I'm known for US and then bankruptcies and winter stores open obviously is a big deal for us as well.
[noise] I got it very helpful and you just kind of touched on pay plays right now and how they behave I know second quarter seasonally a very important quarter in terms of unable to camp and customer edition.
Obviously as as as retailers inspired to try to ramp for the holiday season or the second half assume that's what you're commenting on speech <unk> campaigns and and that is are you and maybe you can get in in that <unk>.
I think it's more around the entire pipelines around analytic sent around.
The deal tied with channels sales and P.R.P. systems, and more enterprise deals remember that the retail community programs. One of those strong parts of our business model is the community I don't know that could accelerate it could be salary. The good news is about you know a meaningful part of our neighbor.
Able men campaigns are just day to day supplier ads for Costco, and Granger and allowed law and people around different sectors. So it's it's I, probably less certain around the enterprise and analytics just don't know how that's going to behave through this process through this especially with store closings.
Great. So I have ultimately q. congrats again.
Thanks.
Your next question sound So the line of Tom Roderick from stifle.
There are two hi, Kim I guess, we'll start by saying congratulations on on the full 10 years is the public company it's been.
Pretty wild ride coming out of the 2009 recession and now do in your 41st call or 41st quarter.
And under the circumstances were in some glad you're safe and healthy and hopefully stone reasonably sane I'd love to chat a little bit a bow. It's just just put some of the state as you look at your customers in how they're weathering the storm as we look at.
Average recurring revenue at Kinda, you know 8500 Bucks you know between eight $9000 per customer per year that sort of you know hints at the nature of a lot of small and midsize supplier you get your churn rate has always been quite low. So I guess, it's an opportunity for you to perhaps reflect on what what you saw happened with the trend rage.
In 2009, and how you think about it in the context of today, where some of those suppliers might be getting choked off by supply chain challenges are some of the stores there servicing or having challenges tickets through how you think about the health of the install base and how you're kind of stress testing of the thoughts about churn right now.
Sure. So we have around 31000, a recurring revenue customers. So we have a lot of.
Depth and breadth throughout our network.
Penetration and you know virtually all the areas of retail with no customer being a significant portion of the rap. So that's one thing to keep in mind. That's a positive the other thing that I would say if you think about our fulfillment product what we are doing for our suppliers isn't mission critical so.
So what that means is if you're a supplier and much say that more of the sales had gone to bricks and mortar but in light of the pandemic more sales are going on line, while they still need our products and services I'm, where they are trying to make sure we can help and support them. So in that case.
Because we are that mission critical product, they're still utilizing feldman product. They just maybe utilizing it in this time slightly different meaning more of the business.
State the obvious it's skewed more online than to stores, where many stores as we know are certainly close to temporarily so I think that that's one thing to keep in mind that that product that we have it very you know again mission critical very sticky product and it's just how they're using us that is changing the unknowns are really for how.
<unk> going to be closed and another I'm known associated with that is as it impacts from a bankruptcy perspective, so darned you'd mentioned in 2008 2009, we did see an increase in bankruptcy, that's probably we have not asking it up cat in a banquet teaser churn into one.
We're still that sort of that you know in your life, 13% customer <unk>. So we have not yet I've seen that but we don't know what that's what that's going to look like going forward and again I think that that's partially going to be driven by depending on how long stories are closed but hopefully.
That helps provide one you think about so that sticky ness of that fulfillment product and the important spent that product still is offering and delivering to our end customers.
Yeah, that's great and Archie just one more question C. one to go to market you guys have always done a really nice job with a low touch sales modeling embracing inside sales and converting customers very quickly you know that that that is a channel assembly is a channel that every company has now I tried to raise for given the the nature of how employees.
Cell from home and sell over the web is that channel getting more crowded is that a tougher.
Need a break through any ways that your side, it sort of moderating or or managing the the go to market now in light of the fact that sort of everyone's chasing after them. All you guys have have really perfected over the years.
Well I think one drastic difference about our model.
Is when are.
Supplier sales Robert Holling.
Hey.
Supplier to try to sell them on our product.
I have a big retailer behind the scenes with them.
Had a merchandising telling them they need them, we turn our calls.
Hmm and threatening to perhaps stopped doing business with them.
If they don't we turn our calls so.
You know that field isn't very.
Crowded again.
Are close rates are you don't anywhere between 60 and 95%.
In those communities deals not always recurring revenue, but eat or a casting contract or recurring revenue. You know most companies are looking to get from inside sales team, 1% to 2% close range that would be a home wrong. So.
Yes, and now I mean, the fact is our sales people are truly sales people are not they're not cold calling.
So yeah, Yeah, you know working from home, it's been our sales team hats off to them. They have stayed incredibly focused and have really done a great job because remember some of these classical suppliers, they're looking to onboard like.
Seven minutes ago, and we're onboarding literally onboarding suppliers within hours, sometimes less than an hour when the industry norm is weeks if not much.
Yeah got fantastic I'll jump back into Q., but <unk> again, nice job and look forward to take care.
Turn next question comes from the line with Joe Row looking from Beard.
[noise], great. However, on you've kind of been touching on this but.
Wondering if you could characterize maybe where C.D.I. is falling it and the pecking order of broader retail I.T. projects, you know what I think.
What you provide it yeah, it's a lot of value for a fairly low price point. So I would imagine that's the type of saying that might actually have more interested in this type of environment, but I'd be curious for your thoughts.
Yeah. Thank you first software fairly new to were fairly new when the pandemic world right. I mean, it's really been about six weeks. So we have six weeks of data and what are typically longer cell cycle.
Early signs are positive and what we found again trying to relate it back to 2009 and your guess is as good as mine, whether we're going to see a similar pattern, but one of the things that happened in 2009 is retailers didn't have massive capital.
Spending projects they weren't building new distribution centres, they weren't doing newly or P. systems.
Our product sail to a retail or we need commitment from the retailer, but not dollars. So we moved out the priority rank for a retailer and that's what we're hoping to see here and it is up <unk> foundational nature.
Frankly to stay at home for retailers further back office being at home.
All the sudden pane of manual processes is really really felt.
The time and effort and everything else and distribution centres needing spacing you need to you you need to be more efficient and more automated there. So I think that part of the business I'm extremely optimistic and that's a part of the business will lead into and rely on and that frankly, if you look at our the rest.
Out of our competitors that is to go to market strategy. They don't have so from a market share standpoint, we think we're extremely set up well over the next year or your deck you know years.
Have a go to market strategy, that's been extremely successful the frankly.
Don't have.
That's great and in speaking pinpoints, there's a lot of anecdotes right now.
Your supplier customers.
How did they just like more visibility odd itself through or you know how it tight as inventory getting at a point of final demand.
And and that specifically seems to be happening in the U.S. So that begs the question on the analytics product.
I understand why it and as a category that might be something that yeah. It makes sense to be a little more cautious I'm, just giving them by are bad, but when you think about again that paying point and watch suppliers are now asking for good that actually see a bit about benefits one slot.
<unk> returned to normal and yet you know you you get a shot maybe make it make Seattle x. pitch again.
Yeah, I think once we get back to call a normal that then yes right now we're concerned with store closings, because you're getting poignant sales data by store stores or clothes, that's not real interesting to know what's moving at a store. This close so that puts pressure on it the other thing that can put pressure on it.
Is that it is a quote discretionary spend as opposed to our fulfillment.
If somebody wants to cancel our service or fulfillment service with Costco that means they have to just stop getting their purchase orders from Costco or hire somebody else, they're not going to go without so it's a little more discretionary spending but the value to the suppliers and the retailers is tremendous so we you know.
I think it'll become more tremendous it's just a matter you know just being cautious and understanding in the short term stores are closed.
And people are you know.
I'm looking for costs savings and you know to spend a dollar to save $2 in the future right now is a tough herself.
Great. Thank you very much.
During the next question comes to the line of Patrick Walravens from G.M.P.
Oh, great. Thank you and I also when I congratulate you guys on your 10 year public company anniversary.
Incredibly my model actually seems to go back.
2000 name, so I know I know scary right. So here, here's here's what it looks like and hopefully that if it's wrong can you tell me, but don't you to await recurring revenue grew 27%.
And then it decelerated for five point, you're so I went 27 25, 2019 17 16.
And then a cue for one night popped up to 21%.
And you were off to the races, and just as a reminder for everyone. The.
The low point from an economic growth <unk>.
Perspective, with <unk> when it was down about 8%.
So tough question I know, but five quarters of deceleration is that a reasonable assumption for us to use.
So as it relates to other may have been an acquisition there I laughing in back in the 2008, but to answer your your broader question. Yeah. We we have visibility into two two and we provided our view as it relates to keep to as it relates to the remainder of the year.
We did withdraw the our annual guidance just because there is a lot of uncertainty there.
I listened to a lot of the dynamics haven't talked about right. So there's some things that put pressure on it as it relates to timing start closures bankruptcy's analytics potential some of the enterprise E.R.P.. There's also positive as relates to community and so because of a lot of uncertainty and the fact that we polled our view at this point.
Hopefully next quarter will be in a position to be able to provide more visibility that would be really difficult to provide a view of what that may look like so again, you'll have the data point Q2, Q. too our guidance is to revenue below Q1 from unquote rate perspective, not but that would be really difficult.
Answer for how long and what that actually looks like I do think that it will be somewhat correlated relating to how long stories are closed.
Okay. Thank you.
Sure next question comes from the line of shapes and Selena from key back capital markets.
Archie again, thanks for taking my question really just one kind of housekeeping type question you know you've given the examples are kinda grocery store businesses.
On the suppliers tied to that segments, but can you help us quantify how much of your businesses that segment or or how to think about it I.
I think the best way to think about it is wearing worried grocery commerce brick and mortar industrial distribution and we're probably not that far off from the <unk>. The general retail segment in the in North America as a whole.
So you know obviously.
<unk> meaningful part and grocery can be Costco price Costco has got a meaningful grocery business. So we would I would think it's fairly you know when we look at it it'd be fairly along the lines of the overall retail market.
With you know some segments being smaller we would just have a smaller.
Part of our business.
But you know we're across all segments and.
Pretty.
Equally distributed I mean anywhere from.
From a grocery D.E. commerce stuff pet supplies and each one has its own dynamics.
Okay, great. Thank you.
Oh.
Your next question comes from the line of tighter would for more expensive.
Hey, Thanks for taking our question just just one for me.
Suppliers on the network could you kind of give us a sense of the share of though is that area kind of just tied to one retailer and.
Potentially leave the network, if a retail bankruptcy, where do occur and then sort of how're you preparing for that possibility. When it comes to ensure that suppliers don't share in in that scenario. Thanks, yeah. So.
You know what here's the way I'll talk about it we have the average is $9100, but we really have three meaningful no. We're not we don't give exact percentage, but three meaningful types with customers. Obviously, there's a bell curve around that $9100 and then there's a meaningful number customers customer accountants to hire.
Number, but from a dollar standpoint, and equal waiting or a a an important weighting of customers that use this for one or two retailers and then we have a meaningful 15 1800 customers a pass 20000, a multiple hundreds of thousands.
The number number one thing is <unk> if they only use this for once or one connection that is our.
Where we lose them most customers far and away that they stopped doing business with with the one retailer and you know our strategy is the same as already spend we try to get them using our product to the extent they have another retailers it perhaps isn't pushing them, but will allow them to do E.D.I. that they see the value and SBS and attempted.
Just for more than one.
But you know that's that's always the case and they tend to be some of the smallest customers.
Alright, that's helpful. Thank you.
Your next question comes from <unk> from benchmark.
Hey, Thanks for taking my question chat on Primark with respect to eliminate there are several private E.D.I. vendors in the marketplace. Today. Many of them are in five to 20 million dollar range.
And many of them are either break even or marginally profitable given the recent retail disruptions to see more of these vendors looking for an exit strategy through lemonade.
I. This is pure speculation because again, we're only six weeks into this so there's not an immediate reaction and I think the answer I I think the answer could be yes, if they can survive they might want to think that their values going to come back. So you're always going to fight that and I would guess, that's the same and every emanate category.
Sorry, but you know the question is for many of these C.D.I. smaller E.D.I. suppliers.
Is can can they weather the storm economically do they have a true cloud based infrastructure that it's reliable that they can they can handle the loads and and do the work and what is or sales process looks like so we think that many of our.
Competitors are going to have a tough time through this and are not set up the way S.P.S. commerce as both for my technology and financially. So yes work, we're trying to make sure that were there and the they're aware of Boston that were built into relationships and hopefully we can buy them.
It can be a little more challenging right now because.
Your your exposure to different industries.
Would be very important right now.
And an m. and a discussion obviously, if you're all grocery we feel pretty good about it.
At least today and if you're all high high priced fashion, it's pretty challenging right now so there's a probably a little extra layer of due diligence.
I'm, an ideal, but I think there's could be an opportunity going forward there.
Okay, Great that's all I got.
Offend anyone wants that's a question. Please press start one on your telephone keypad.
Your next question <unk> from Craig Helen capital equipment.
Hey, guys. This is really on for Jeff.
With the June guide I mean, surely guys took some caution on it which were the first areas you sorta hair cut into little based on what you're seeing it and what you think you'll see throughout the rest of the quarter.
So as it relates to the Q2 revenue guidance that we gave that was based on what we're seeing thus far in the corridor as well as the pipeline say well look at our.
Existing customers as well as up sell opportunities and new customers and a lot of the new what comes as we look at that community enablement activity in the corridor. So we take all of that into account and then we provide what we believe as appropriate guidance based on what we see.
In the pipeline as well with with our existing customers.
Got it and if you could just you know think back to to designate 2009 I know currently the customer terms about 12, 13%. If you look back she doesn't need to design. What you guys have any details on what percentage of your customers, maybe went bankrupt or what the the customer turn increased.
Too.
Yeah. It was a couple percent on a customer carrying out about it at 1% on the dollar in higher back then.
God at Great very helpful. Okay, great. Thank you.
I'm showing no further questions at this time.
Studies Conference call. Thank you for participating and have a wonderful day give me all disconnect.
Oh.
[music].
Yeah.