Q4 2020 Liquidity Services Inc Earnings Call
Welcome to the Q4 of the fiscal year 2020 liquidity services earnings Conference call. My name is channel the operator for today's call. At this time all participants are in listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you do have a question press Star then one and I guess.
Oh no.
And I'll turn the call over to Julie Davis Senior director of Investor Relations.
Thank you John Hello, and welcome to our fourth quarter and full year, it's funny plenty of financial results Conference call.
Joining us today, our bell and Greg, our chairman and Chief Executive Officer, and Jorge supply of our executive Vice President and Chief Financial Officer will be available for questions. After our prepared remarks.
The following the cash and responses to your questions reflect managements management's views as of today December Eightth, Tony Tony and will include forward looking statements actual results may differ materially and.
The information about factors that could potentially impact our financial results is included in today's press release and in our filings with the FCC, including our most recent annual report on form 10-K.
As you listen to today's call. We encourage you to all of our press release and kind of you.
Which includes our financial results as well the metric of my commentary on the quarter.
During this call well, that's kind of certain non-GAAP financial measures and our press release and our filings cc each of which are posted on our web site you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these matters with comparable GAAP measure.
We also use certain supplemental operating data as a measure of certain components of operating performance.
Which we also believe is useful from management and investors the.
Couple of metal operating data includes gross merchandise volume and should not be considered a substitute for or superior to GAAP results.
At this time I'd like the turn the presentation over to our CEO Bill Angrick.
Thank you and good morning, welcome to our Q4 earnings call.
I'll review, our Q4 performance and provide an update on the strategic initiatives.
Next parties to lie and we'll provide more details on the quarter.
Liquidity services reported strong Q4 results due to increasing customer adoption.
Of our safe and effective E Commerce solutions.
Across all business segments as businesses and governments.
See prove and digital solutions to stay competitive.
Driven by our multiyear transformational investments.
And marketplace economies of scale.
We recorded significant year over year growth and.
Both our top and bottom line financial results.
We're very proud of our team's efforts during the quarter to maintain a safe work environment for our associates.
While helping our customers many of whom are small businesses.
Efficiently conduct commerce globally and.
Over 500, B to B product categories.
Liquidity services continues to play and the central role and how businesses and government agencies operate within the 100 billion dollar plus.
Reverse supply chain market.
Our marketplace platform.
Buyer base.
Software and services.
Our best in class.
And deliver a competitive advantage for our customers.
Our continued growth and success.
Reflects several macro trends.
Including.
The secular growth of online retail.
Which drives the need for comprehensive returns management solutions.
The need for organizations of all sizes to embrace technology to drive overall supply chain efficiencies.
And to monetize assets.
And finally, the increasing focus by business and government customers on sustainability.
Our solutions uniquely address all of these customer needs.
And the investments we have made the past few years.
And our online marketplace platform.
Marketing stack the technology infrastructure.
Have position liquidity services extremely well.
To meet customer needs, both today and and the future.
These needs are not you need.
The the climate up of pandemic.
Liquidity services is the constant cyclical business, which helps clients create value both in periods of economic expansion.
As well as contraction.
We are distinctly.
Well position.
The benefit from anticipated growth.
And the reverse supply chain market.
Overall, our strategy and recent platform investments have been rewarded.
By strong financial results during the second half of our fiscal year 2020.
Allowing us to finish the year as a stronger more efficient business.
Our E commerce marketplace capabilities.
Continue to drive strong recovery for our sellers and of enabled us to scale our services quickly.
As more customers see.
The efficient self service solutions to manage surplus and returned goods and the supply chain.
And turn our higher recovery rates have driven increasing adoption of our consignment pricing model positively impacting gross profit margins.
GMB and our gut feel segment grew a record of 35% year over year as more government agencies utilized our digital platforms, the transact higher volumes and a growing buyer base and automated asset promotion tools growth higher realized values through our marketplace.
This performance has sparked growing interest and our platform by sellers of higher ticket items, and the transportation and heavy equipment categories.
GMB and our retail supply chain group segment grew 33% year over year as more large and SMB retail sellers adopted our platform and existing customers increased their transaction volumes on our marketplace.
Of note GMB for our self service retail solutions more than doubled year over year as more customers embrace the flexibility and convenience of selling items directly on our platform.
GMB and our capital assets group segment declined 8% year over year due to the wind down of the deal the scrap contract.
Excluding the expired scrap contract CAG segment, GMB grew 3% year over year during the quarter our.
Our cash heavy equipment category grew strongly during the quarter and sellers took advantage of our self service solutions and our marketplace continued to deliver strong results.
The expense ability of our E commerce platform to third party sellers and a global scale.
Is another important growth vector per liquidity services.
For example.
We launched our new all surplus platform and South Africa of recently and have quickly become and then the destination in that region for both consumer goods and heavy equipment with over 1000 online.
Online completed transactions today.
Lastly, our machining of segment grew revenue by 5% during the quarter as equipment owners and dealers began to prepare for a broader reopening of the economy by embracing machine is digital marketing solutions to connect with buyers at lower costs when compared to traditional marketing channel.
Yes.
We are excited to and fiscal year 20.
With strong non-GAAP adjusted EBITDA results and improved margins as we leverage our new marketplace platform and technology improvements to the benefit of our sellers.
Our buyers and our shareholders.
Looking forward, we are focused on becoming a 1 billion dollar GMB annualized the business.
We are seeing seeing the benefits.
Of increasing scale driven by strong tailwinds.
The allows us to leverage our fixed cost and marketplace business model.
Because of our strong and growing buyer base, coupled with intelligent machine driven asset promotion tools more clients are adopting our consignment pricing model to share and the upside created through the stronger price realization and our marketplace.
Thus, we believe growth and our GMB and gross profit, which is the proxy for net revenue.
Are the best measurements of our progress.
Because GAAP revenue was impacted by the changing mix and our pricing models.
The efficiency of our business is best measured by adjusted EBITDA margins as a percentage of growth gross profit, which have steadily improved.
Together these metrics provide shareholders a good measurement of both the sustainability and efficiency of our business.
In closing.
We'd like to thank our employees for their dedication to our mission.
And we believe we are well positioned to help our customers navigate the global and impacts of the pandemic.
And beyond using the strength of our online platform and the ingenuity of our team.
We're excited to continue our role as a global market leader to cash.
Great value for our customers and shareholders in the years ahead.
I'll now turn it over to Jorge for more details on the quarter.
Good morning.
As Bill mentioned the finished our fourth quarter of.
Fiscal year 2020, with the strong showing much more of the.
GAAP net income GAAP EPS and adjusted EBITDA.
These results through an unprecedented global pandemic.
Reflect the value of our services for sellers and buyers and the benefits of our multiyear transformation and platform investments combined with the realignment rationalization and streamlining of our operating expenses.
We are pleased with the positive reception for and increasing customer adoption of our services.
The key purpose of transforming our technology and business offerings has been to enable us to leverage our platform in order to scale our business the.
Combines with the mix of services for better margins and more profitable results.
Our fourth quarter of fiscal year 2014 results demonstrate how this can come to fruition.
Comparing to the fourth quarter of 2019, we generated positive results and include GMP of $196.9 million of 25%.
GAAP net income of $5.4 million up $10.7 million.
GAAP earnings per share of 16 cents of 32 cents.
And the adjusted EBITDA of $9 million up $9.7 billion.
Fourth quarter revenue of $55.9 million was down $2.9 billion, reflecting and stronger mix of full service and self service consignment model transactions.
As compared to the fourth quarter of 2019, where the mix of our purchase model transaction last year, where a greater proportion of total GMB.
These fourth quarter results reflected one.
Increasing activity in our GAAP, you'll segment with government agencies and able to the lives of digital platform.
Our growing buyer base and the cup and those and use of automated outs of promotion tools help with higher recovery values within our marketplace.
Especially in the vehicles category, where in combination with overall market trends, our recovery rates increased year over year.
Two.
Solid growth and our supply chain group as more of marks and SMB retailers adopted our platform.
And support services and existing customers increased the transaction volumes.
Three.
Growth in our machine sales segment of the equipment owners and dealers leveraged our digital marketing solution. The cannot buyers had a lower cost the traditional methods.
For.
Solid growth related to our new focus on the heavy equipment vertical and our AG segment.
With the offset the wind up of the scrap contract.
Pac continues its momentum and having a more episodic nature.
Its activities and international called the travel constraints.
And five improve.
The improved gross profit margins driven by price mix.
Mix and adoption of our consignment model over our purchase model in certain segments and an increase in recovery rates across several verticals.
More specifically comparing the fourth quarter results from the same quarter last year our.
Our GAAP deal segment was up 5% on my part and 2% on revenue.
Our retail our CG segment was up 2% and consumer.
7% on revenue and.
And our cash settlement.
Were down 8% and sound system.
Some of the revenue that excluding the the surplus contract.
The cash segment GMV was up 3% and the record of down from 4%.
Mosquitoes revenue was up 5%.
We have a debt free balance and.
Ended the quarter with $76 million and parents.
Up $9.5 million compared to the fourth quarter ending September 30 of 2019.
And up sequentially from this past quarter and which.
Also included $4 million and stock repurchase.
Turning to our full fiscal year 2020 results the year marked by the economics of the maybe we'll share from the global pandemic.
Our CG segment, the or beat was up 16.3% and the revenue increased 7.2%.
Our GAAP deal segment was down about half a percentage point for both revenue and the appeal and our cat segment the.
The decline from 7.9% of revenue declined from one.
1% inclusive of the transition out of the view of the scrap contract.
Machine of segment revenue increased 21%.
Looking ahead the fiscal year 2021.
We will continue to focus on growth and expanding our self service offerings.
And our our all surplus of aggregated market price.
We remain focused on execution of our REIT strategy, which we believe will contribute to better position us through flexible seller service offerings and the enhanced prior experience.
We are closely monitoring the impact of the cobot non to the pandemic on our economy, our sellers or buyers.
And on our and operations, while we continue to deliver our services reliably to existing customers.
At this time as we report.
Our year end results, we are comfortable providing guidance for Q1 of fiscal year 2021. Despite the continued uncertainty created by the global pandemic and its impact on the global economy.
We will evaluate providing guidance on a quarter by quarter basis during fiscal year from 21.
For our first quarter fiscal year 2021, our outlook reflects continued year over year growth and our GAAP deals and RCG segments.
As our ecommerce solutions provide safe and efficient leads the transact.
Potentially slightly higher results and our excellent the.
And the continues to impact the global economy.
And benefits of our cost control and cost reduction measures.
We also anticipate our service mix between consignment and purchase models will vary quarter to quarter.
And that we.
We will continue to launch the incremental functionality across our marketplaces.
To enhance the seller and buyer experiences.
Which may increase our sequential marketing expense.
Management's guidance for the next fiscal quarter is as follows.
We expect you to be for fiscal year Q1 of 2021 range from $175 billion to 195 the results.
The GAAP net income.
As expected for fiscal year.
Your first quarter of 2021, and the range of $200 to $3 million with the corresponding GAAP earnings per share for Q1 of 2021 brings and from six cents to nine cents per share.
We estimate non-GAAP adjusted EBITDA for Q1 of 2021 to.
The range from $5 million the $6.5 million.
Non-GAAP adjusted earnings per share is of promoter for Q1 of <unk>.
2021, and the range or the.
Eight to 12 cents per share.
This guidance assumes the how the.
Diluted weighted average shares outstanding for the quarter of approximately 34.6 million shares.
We will now take your questions.
Thank you and I'll begin the question answer session. The future of a question Press Star then one on your Touchtone phone.
Once again the future of a question Press Star then one on your Touchtone phone.
And our first question is from Gary.
Most of you know from Barrington.
Hey, good morning, all.
Couple of questions here first of all.
Sales given that.
We're seeing more and more online shopping.
Are the online retailers at this point starting to see a greater percentage of returns coming back to them Thats coming coming back to you and at one time I think something like the retail returns on on E. Commerce were about 10% is that about right of all law.
Shopping and all of it has that really increased at all.
Gary.
Number one.
We we've witnessed.
And the earlier sharper increase and.
The proportion of retail moving on line.
The volume of.
Online sales growing as it has will increase the volume of return goods and to our channel.
The return rates are higher than 10% and many categories.
I don't think any of these online or omni channel players.
Lot of risk, losing any sales there.
They are encouraging clients customers too.
Spread spend freely.
The some promotional elements to that day, Dave and.
Courage multiple.
Skews of different sizes, if needed to get to the right of product. So we know that return rates are well above 10% of many categories as high of 30% of some categories you have a lot of.
Higher value consumer electronics items, where you see sometimes the.
Either technical glitches or buyer's remorse, and those items going back apparel is the huge category of returns.
Housewares, even housewares is.
The big area of returns and now we have lots of bulk items being sold digitally appliances furniture, and we are uniquely positioned to help and those areas too because we have the national distribution vision center footprint, which helps these online retailers reduce costs by allowing the.
Consumers to return to our facilities so without question we.
We're seeing.
Just this massive secular growth and on the retail probably.
Various analysts have said we've gone from roughly.
Mid teens penetration of total retail and online to about 30% penetration of total retail online now in a matter of about nine months.
Yeah.
Well, that's kind of benefit you certainly and then can can you just talk a little bit about of.
Some of these automated asked us and.
Asset promotion tools.
That you're using that help to drive growth and and GM being GAAP deals what does that entail.
Sure and I think Thats, a broader theme carry certainly not limited to our business and our industry, but we know of marketplace business model benefits from scale.
And we drove.
Organically, 25% more volume and our E Commerce platform. So that's that's always going to help of marketplace business model generate operating leverage when you overlay a day.
Additionally, a more efficient business driven by technology investment, that's what really becomes compelling.
For example, with.
With the investments, we've made and of marketing technology stack, we're now understanding what every individual buyer.
You know reviews bids on the purchases and so we have.
Of artificial intelligence and machine driven automation to that present.
The.
The available assets to those buyers dynamically to increase the propensity of them bidding and buying and our marketplace. So we know Gary press potato.
He browsed and bid on pickup trucks, and that's an area that he likes of the next time, you log and you're going to see recommendation engine of.
The train those assets for you.
As opposed to the other buyers and.
And so that learning and that algorithm strengthens overtime and allows us to make better.
Better matching available between the supply of assets and the buyers who come to our marketplace.
Do you also have upside you also have the mechanism where the specific piece of equipment cash.
The gory comes up for sale that you can send emails to buyers that had the at the absolutely we have the.
The search page and that.
That will automatically send.
The selected.
Filter or desired assets to individual buyers.
We'd also point out that over 50% of our spending is occurring on mobile devices and we've invested over the last few years and much stronger mobile responsive design, which is allowing these buyers to have a better experience and encourage more of.
Robust activity, including bidding on mobile devices. So all of those things come together to help drive broad.
Broadly and more efficient business model and higher.
Buyer participation.
Which as you know drives higher recovery rates, which allows us to satisfy sellers.
And do more business.
Okay. Thanks, I'll, let the I'll get back from Q, let somebody else go. Thank you.
Our next question is from Dan from.
Baird.
Hi, Good morning, guys and some adult monitor call and.
Congrats on the quarter just a couple here.
First off looking at guidance for next quarter.
The bulk of the holiday shopping season behind you and given a lot of the commentary we've heard that a lot of shopping and and you said a lot of the returns have really been pulled earlier into the quarters and typical I guess my question is what are really the biggest unknowns as we look through the rest of December and what really has.
The kit change dramatically for things to move one way or another versus where you're looking at them right now a week and the December.
Well Dalton.
You the.
The realized you rightly point out that.
This this for us for most companies is.
The call that occurred later in the quarter that typically is the case.
And that's why we are in a position to provide.
Guidance.
That being said the.
The.
The unknowns.
With the policy decisions affecting availability of facilities, principally in our government business and in our industrial capital assets Group segment the.
Those those are segments, where you know.
Decisions to do full closures.
Have adversely impacted the ability to conduct.
The sort of routine pickup of assets upon the completion of the sale, which prevents us from booking.
Completed GMB and revenue now those those policies have Ben.
And evenly applied and I think Dave price.
Proved.
Significantly in the us over the course of the last six months.
Having said that Europe still has the many.
The significant closure per.
Policies and the of restrictions on travel.
It has been a headwind for the capital assets group business and the in the short term.
And the in the US you know you have certain jurisdictions, California, as an example, where it's still.
The of fairy EPS.
The harsh and some areas to operate the even within the government arena. So those are the things that are out there.
Our guidance.
As we sit here.
Reflects the trends that we're seeing.
If something were to take a really sharp correction you could still have some interruption and.
And the government business.
And you know, we don't give and the business of prognosticating the government policies.
We're very enthusiastic about the macro trends and the macro trends suggest beyond any.
Short term response to a pandemic that you know the.
These clients they want to have more flexibility they want to work more efficiently.
Specifically and the government business you know you have 10% 20% hit.
Hits to revenue and those county, and city jurisdictions, the looking to be more productive, they're looking to monetize idle equipment.
And also to continue to fly the flag of sustainability on the our business model is so unique and that no. One has to drive to an event. None of these assets need to be shipped from the seller location to an auction yard. We allow these these government entities and it and for that matter of corporate entities.
Equipment dealers to sell the items and place the asset doesn't move we connect with the buyer the buyer efficiently picks up so thats, reducing the carbon footprint for all of our clients and our buyers and its something that we believe is getting more and more attention. We the do it for 20 years by the way, but we think it's getting more attention from our customers we thinking it.
Getting more attention from institutional shareholders.
Who are very focused on you know.
Yes, yes, the investing so I think those are the macro trends that we pay attention to.
If I could add the third quarter.
Of course and in addition to fill of just said we also.
You saw in my comments.
Doug Capital assets Group continues.
And you haven't episodic business, where you have.
Large deals that come and go from.
From time to time of different customers.
And they could.
The.
A consignment deal or purchase the old depending on how the transaction involves or it could get.
Delayed per month, which would put it in the next quarter. So we're comfortable with our guidance.
But you have to have a range because you can have things that.
The.
The slip for example, and.
That would be another factor as to why the fleet in the quarter, we still have some obviously some range in our and.
Our business. In addition to what Bill has just stuff has just said.
Great. Thanks, guys that helps the line and then maybe turning to registered buyer growth and trends have been looking pretty promising there and I'm pretty clear that you've been able to drive the state of an increase and bringing more buyers of the platform, but to the extent to which that translates into growth.
And auction participants and transaction volume just wondering is that kind of a mix shift impact there, but that's driving that delta or is that something that youre consciously trying to drive conversion of registered buyers to drive more participants and transaction growth or is that just something that's kind of the secondary funk.
And out of all the other user and and interface improvements. The you already the mentioning well those are two metrics. We've reported for a long time adult and add let me just make sure that we have some.
Clarity on the difference so our business is always focused on increasing the number of.
Unique participants for every item sold.
We've had robust participation very strong recovery rates and the quality of the buyers that we're attracting quality of the buyers is and increasing these are of buyers who are buying larger.
Larger ticket items.
We're seeing a lot of participation and the transportation and vehicle categories and the construction and heavy equipment categories and so the average value per transaction is trending up and I think thats just a function of the things we talked about when you look at being and efficient.
Seller and capturing more value for the items sold you want to remove the lot of these.
Make ready costs, and transportation costs, and and really get too.
The highest net recovery possible and so we've been focused on bringing the right buyers to bear for those higher ticket items the.
The other thing I would point out is that weve added functionality to benefit the sellers. So that the sellers can do hybrid sales of of items, which include the traditional competitive online auction, where the highest bid of wins coupled with a make offer alternatives. So.
The buyer comes in and wants to preempt the auction and and hit the bid and buy it and now they can do that.
And so when you have a buy now try.
Transaction there is only one.
Bidder and theory, one bidder for that item recorded and auction participant number so thats why that number might be lower the.
And true.
Additionally, it's been the case.
Right that makes sense and then just one more quick one and then I'll hop back in queue I have anything else, but you mentioned the the goal of driving a billion dollars and GMP.
Obviously, that's a lot of long term plan here, but just kind of wondering as you look at the opportunity ahead of you how.
How much of that do you think lies within your existing footprint and existing verticals and it's just driven by increased buyer growth and penetration there or do you think you need to expand into new marketplaces, new verticals and just expand the total Tam there in order to reach that sort of scale, thanks, well adult.
I think the.
The market is the air for Us and our current verticals too.
Achieved the billion dollar annualized GMP milestone.
Were roughly $200 million of GMP per quarter coming out of the September quarter, and you know our business does have the various puts and takes and seasonality, but the macro trend for us.
Yes, just consider that the growth and online retail.
Recently.
The doesn't the 30% to 50% year over year growth through the black.
Friday, cyber Monday, 30% to 50% year of your growth.
We're highly leveraged to benefit from that trend and the retail supply chain just organically as you look at the mix shift occurring there. We've got the best distribution center footprint, we've got the thickest buyer base, we have the.
Merchandising and sales channels and place to deliver outstanding results and throughput and.
And velocity for.
Ecommerce retailers, omnichannel retailers and the vendors and supply them.
We know that Theres day.
Secular trend to embrace of Digitization.
And supply chain, and how you manage and and value and monetize assets.
We're a proven leader and that category, so as industrial supply chain.
Embrace the sustainability looking to reuse.
And redeploy.
High value equipment around.
Around the world, we're very well positioned to be.
A champion of that cause of that.
Best practice.
And then the government arena, it's a $3 billion.
The Tam.
And the U.S.
Our businesses.
You know of call it 15% to 20% penetrated with with the very strong network effect.
We believe we can be that best practice that proven.
Data driven solution provider for these these governments, who are looking to to be more efficient the looking to be more environmentally responsible. So there is a terrific opportunity and our and our current core business and and what we're finding is that.
People are getting religion, probably a little sooner because they've been force to rethink how they do business.
And that's probably the biggest takeaway for all industries and the pandemic environment is people have been open minded to looking at the digital.
Alternative to the legacy solution.
And when we get the opportunity to present, our digital marketplace and self service solutions.
People don't go back and that's the real opportunity here.
Perfect great. Thanks for all the color.
And we have another game on the other question from Gary from Barrington. Please go ahead.
Sure.
Where do you think I mean, the the contingent business is about 82% of you.
Total business, where do you think that goes to the think that continues to creep higher Bill and then the second question would be.
The second question would be what leads the decision to go continued versus purchase self service versus full service on the on the sellers and.
Sure.
Well, we were born as a 100% consignment business 20 years ago, and we always.
Suggested to our clients, it's and their interest too.
Payoffs on a revenue share basis, because they share and the upside created.
We.
You know drive higher participation and higher competition and so we've always had that philosophy. However, we've always provided a menu.
Of options.
We don't want to dictate to our clients what they must use want to give them the flexibility to migrate between those as they see fit so the pricing model consignment versus purchase if it's always been available to our clients. We've just noticed that.
As clients of experienced the marketplace. They have elected to use more of the consignment pricing model recently, and we don't necessarily predict of forecast and the future where that's going to be we just think there is a broader trend as we have a transparent marketplaces as sellers can see the results.
They have elected to drive more to the consignment model they get the upside created when we increase the pricing for these assets to work, we're still happy to purchase model of.
If the clients so choose and we have people.
People the.
The participate in that market and the reasons that they might do that related to the.
The inventory controls or Sox controls, but I think the broader opportunity is to create and incentive aligned structure, what type of sellers to share of the upside with them as our marketplace becomes more and more competitive more robust and terms of self service versus full surface again theres a continuum.
Clients that.
Need the assistance.
To catalog and manage sales we will provide that assistance now there is the cost to do that and that increases the.
Overall fees that they would pay we've taught we of course, we've developed outstanding tools to allow sellers to manage the transaction process on their own after an initial orientation and many of them see the the benefits of that they'd like to have the control.
The ability to.
Set the terms of their sales of load their own equipment and you know with the data that we can provide through their client portal they feel very comfortable doing that and so we see not.
Not just in our industry, but across the landscape of.
The VTB solutions that many corporate and government clients very much like that self service alternative and we are providing it and we think thats a trend that will strength and overtime.
Okay.
So if I read it right, you're saying that the self services, becoming more prevalent.
The overall versus full service I mean could you can you kind of break down of you'd make it public the percentage of the consignment that is full of versus sell force. That's something you don't give out well.
Well, it's not a metric that we give out but we would say it's the majority of our business and it's one that has natural attraction for corporate and government clients because the.
They are capturing more of the the value created and the transaction because they pay and lower fee when its self service versus full service now the guidance certain clients or in Extremis that they don't have certain resources and they need.
Certain assistance with logistics or valuation, but we're marshaling, our data where marshaling, our automated marketing tools to deliver that and a self service package where sellers can.
Efficiently.
Have a smarter and faster way to list and sell assets get great execution on the buyer side.
We're there to help them on.
Anything else that would arise during the course that transaction. So psychologically I think it's important for all of these customers to know were there for them if they need the additional help.
Okay. Good and then just a couple of more by May.
It looks like.
And give us Q4 numbers broken out, but and I kind of back of the envelope. It looks like your operating expenses were running at about 28 million.
Versus $33 million last year.
In terms of.
You know what we're expecting per next for this fiscal year.
Obviously theres going to be some increase but is there any kind of big increase that we're looking at the or is it just kind of move in proportion to what the top line and the GMB growth will be.
Well there have been.
Operating efficiencies captured as Weve completed some of our.
The integration work, so we're not going to see.
Step function growth and things like.
Technology or ERP integration type work.
That's behind US, where we are spending more money, Gary is and the sales and marketing organizations to take advantage of this window of opportunity.
In fiscal 21 of the does continue to see.
All of these macro trends, where there is the need in the marketplace for.
The reliable digital solutions to.
Managed and sell the equipment and inventory and.
And that's and.
Any any major industry you look at it for example of bio Biopharma and healthcare.
That business grew extremely strongly and the last quarter. There is a global search and research and development partly sponsored by.
Operation Warp speed to develop vaccines and other.
Cures and all of that test and measurement equipment that major R&D expense is a leading indicator to what ultimately flows into our marketplace.
And so we want to be at the other examples of the energy supply chain and to continually is rebalancing this opportunity there.
Of the.
Continued.
Technology innovation, and the automotive and transportation supply chain is resulting in a lot of equipment, becoming available and those markets the need to be sold and we.
We just think that.
The sales and marketing investment as appropriate as we.
Have such a huge opportunity and the future to grow in line with these macro trends.
Yes, I guess, what I'm getting at is just the.
Maybe I could ask the question another way of the Q4 numbers reflect per.
People take and back on furlough, and et cetera, things like that looks like last year.
At this time you first two quarters, you spent about 90 million almost 20 million on sales and marketing so.
Given that those numbers I mean it.
You are still looking at an increment above those numbers for fiscal 21.
Just trying to get a guide as to how we should look at that some of these expenses going forward.
Yeah, I think there'll be some incremental growth and sales and marketing spend okay. That's fine that's all I want it then.
Lastly.
Can you tell us and maybe how in terms of how the different businesses over evolved and changed as we look at the quarters. It used to be that your Q1.
Or your your Q1 was your second strongest your Q2 of your first strongest and then Q3 Q4 has has that really changed that much in terms of your anticipation of of how the year would be.
I would put out in terms of GMP generation.
Well I'll I'll, just give a broad.
Set of observations and Jorge can respond to any specific questions and on the guide, we're giving guidance this quarter.
Because we have the benefit of.
A lot of that baked.
And to the at the three months ended December 31.
It's it's hard to say in 2021, whether these historical patterns will repeat themselves because of just so many.
Exactly and this factors you have what is the people's willingness to take of vaccine and newly developed vaccine and policymakers to line up behind that and go back to sort of the traditional economic activity remove restrictions around travel remove restrictions around sort of.
Of the.
The access to manufacturing facilities and government facilities that sort of the biggest contingency that's out there normally normally we would see.
You have a strong post holiday seasonal of returns period of January is obviously slow.
But things pick up as you move centrally from January through the.
The July timeframe and the traditional year, Gary those are strong periods, and then a little slow down and August.
So I think what our goal is.
And talk about the things the week to our goal is is to have.
We have a very robust sales and marketing apparatus.
That is continually looking to pick up share.
That will.
Override.
Seasonality and the business that.
Thats our goal okay. Okay.
Okay and the.
And lastly, and then I'll jump off would you talk about the billion dollars of GM. The goal is it reasonable to assume that you could get there and five years.
I would hope so I would hope so I think the.
You look at the Tams and you look at our large per penetration and.
And.
You know the glide path of we're on to have relevant solutions to be able to make a compelling case for.
Those those prospects to come to the digital.
Solution and we feel very good about.
The value that we're creating for our customers and that being a.
Hey, very solid targets for a scary.
Okay. Thank you.
[music].
And once again, a few of a question.
Okay.
Thank you, ladies and gentlemen that concludes today's call. Thank you for participating and you may now disconnect.