Q3 2021 SPS Commerce Inc Earnings Call
Okay.
Hello, Thank you for standing by and welcome to the SPS Commerce Q3, 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone please be.
Advised that todays conference maybe recorded.
Choir any further assistance. Please press star Zero I would now like to hand, the conference over to your speaker today.
Blast Cheng. Please go ahead.
Thank you Josh good afternoon, everyone and thank you for joining us on Sps Commerce third quarter 2021 conference call, we will make certain statements today, including with respect to our expected financial results go to market strategy and efforts designed to increase our traction and penetration with retailers and other customers.
These statements are forward looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to publicly update or revise any forward looking statements whether as a result of new information future.
Events or otherwise.
Please refer to our SEC filings, specifically, our Form 10-K as well as our financial results press release framework detailed description of the risk factors they might affect our results.
These documents are available at our website Sps commerce dot com and at the SEC's website SEC Dot Com. In addition, we are providing a historical data sheet for easy reference on our Investor Relations section of our website Sps Commerce dotcom.
During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP earnings per share in our press release and our filings with the SEC each of which is posted on our website you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures and with that I will turn the call over.
Archie.
Thanks for Mena and welcome everyone.
Ongoing momentum in E. Commerce continues to drive demand for Sps's fulfillment solutions, resulting in strong enablement campaign activity and another quarter of great execution.
Total revenue grew 23% to $97 $9 million and recurring revenue grew 20%.
Understanding evolving.
<unk> trends is more imperative than ever retailers are expected to create a seamless and hassle free shopping experience, while offering extended aisle product assortment.
This can only be accomplished with a true omnichannel fulfillment and Sps commerce is uniquely positioned to support our customers as they conform to today's retail dynamics.
Ruby has a fast growing ecommerce fulfillment and logistics provider for direct to consumer brands and retailers serves a range of customers to represent their products across all retail channels.
Ruby has integrates with Sps commerce decks access their customer systems, allowing for a seamless order flow inventory management and delivery.
This partnership has proven to be invaluable for brands like coil with five retail locations wholesale partners and the majority of sales happening through their website.
<unk> relies on our strong partnership to ensure they're not just meeting, but exceeding customer expectations. When it comes to a quick simple order and delivery experience.
Okay.
The evolving retail dynamics are also prompting brands to migrate their on premise solution to a cloud ERP, which impacts Adi operations.
Hello, Bello as a family and baby product company, making plant based premium products at a non premium prices co founded by DAC Shepherd and Kristen Bell the brand was transitioning to our cloud ERP and selected Microsoft dynamics 365 to prepare and meet the operational needs of current and future growth.
Having signed a one year exclusive contract with Walmart They had only weeks to get up and running with an Adi solution. There was fully integrated with our new ERP to ensure their operations could handle the expected volume.
Thanks to Sps as strong network and a retailer experience combined with the database and his expertise and Microsoft ERP integration Hello Bello went from signing to go live in a matter of weeks, demonstrating how our joint solution accelerates implementation timelines.
Bucky's, a gas station and convenience retailer with approximately 40 stores across the U S recently announced the ground breaking of the world's largest convenience store and family travel Center.
With a growing number of locations. The company is looking to increase efficiencies through the supply chain by improving visibility into shipments and inventory.
In conjunction with an ERP update Bucky's is looking to automate order fulfillment across all their vendors and chose Sps commerce for their <unk> solution.
As the retail landscape continues to evolve Sps commerce is expanding its global market leadership in providing the easiest to use full service solutions that help retailers work efficiently with their suppliers.
Our network World Class technologies and.
And partnerships continue to deliver and exceed our customers' expectations as they transition to a true omnichannel fulfillment model.
With that I'll turn it over to Kim to discuss our financial results. Thanks, Archie we delivered a strong third quarter of 2021 revenue was $97 $9 million or 23% increase over Q3 of last year and represented our 80 <unk> third consecutive quarter of revenue growth recurring revenue this quarter grew 20% year over year.
The total number of recurring revenue customers increased 10% year over year to approximately 35400 and wallet share increased 10% to approximately 10350 for.
For the quarter, our adjusted EBITDA grew 14% to $26 $5 million compared to $23 2 million in Q3 of last year.
We ended the quarter with total cash and investments of approximately $252 million.
In addition, as our current stock buyback program is expiring on November <unk> 2021. The board of directors has authorized a new program to repurchase up to $50 million of common stock. The program becomes effective on November 28, 2021 and is expected to expire on November 28 2023.
Now turning to guidance for the fourth quarter of 2021, we expect revenue to be in the range of $99 9 million to $105 million, we expect adjusted EBITDA to be in the range of $26 3 million to $26 $8 million.
We expect fully diluted earnings per share to be in the range of 24 to 25 cents with fully diluted weighted average shares outstanding of approximately 37 3 million shares we expect non-GAAP diluted earnings per share to be in the range of $1 42 with stock based.
Compensation expense of approximately $6 $5 million depreciation expense of approximately $4 1 million and amortization expense of approximately $2 $5 million for.
For the full year, we expect revenue to be in the range of $382 4 million to $383 million, representing 22% to 23% growth over 2020, we expect adjusted EBITDA to be in the range of $105 6 million to $106 $1 million, representing 21% to 22% growth over 2020, we.
Expect fully diluted earnings per share to be in the range of $1 10 to $1 11 with fully diluted weighted average shares outstanding of approximately 37 million shares we expect non-GAAP diluted earnings per share to be in the range of $1 76 to $1 77 with stock based compensation expense of approximately $27 $8 million depreciation expense of approximately <unk>.
$18 1 million and amortization expense for the year of approximately $10 $2 million.
For the remainder of the year on a quarterly basis investors should model, a 30% effective tax rate calculated on GAAP pretax net earnings.
Beyond 2021, we continue to believe that e-commerce dynamics will fuel strong momentum in fulfillment for the foreseeable future and we maintain our annual revenue growth expectations of 15% or greater we will provide detailed 2022 guidance on our Q4 earnings call, but for modeling purposes, we expect to deliver 124.
To $126 million in annual adjusted EBITDA in 2022 beyond 2022, we expect adjusted EBITDA dollar growth of 15% to 25% as we continued to invest in the business to capitalize on market dynamics and support current and future growth and the long term, we maintain our target model for adjusted EBITDA margin.
A 35%.
In summary, with strong momentum and fulfillment and large growth opportunities for our analytics solution as retailers and suppliers continue to improve efficiencies across the supply chain. We believe Sps commerce is well positioned to capitalize on our multibillion dollar addressable market in front of us and with that I'd like to open the call to questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to it.
Draw your question press the pound key please stand by we compile the Q&A roster.
Our first question comes from Matt Pfau with William Blair. You May proceed with your question.
Hey, guys. Thanks for taking my question and nice results.
Or should the customer examples that you gave seem to have a similar theme where they were all sort of driven by our ERP replacement. Just wondering are you seeing an uptick in ERP replacement and specifically maybe on the Microsoft.
Hum.
Cloud dynamics part is that is that uptick in as well in helping out.
Databases business there.
Yeah. Thanks, Matt we definitely have seen a slight uptick overall in movement of.
To the cloud ERP.
We obviously with the data masons got into the Microsoft market in a much deeper way and we've definitely seen strong momentum there as Microsoft is really pushing.
Towards the cloud so that has created momentum and I think similar to what we saw when we did the map of the <unk> acquisition acquisition and everything else. It is proving out that we can execute.
Much better for the customer and we can also.
We have a higher win rate and were in a better position to win those deals going to market together as opposed to together as two separate organization. So I think what.
What our premise of purchasing data masons on is clearly playing out very very nicely.
Got it and just to follow up on that.
Outside of the Microsoft ecosystem, or maybe even including that or those ERP replacement deals driven primarily by partners or is that an internal sales force. That's that's increasingly driving those deals.
I would say it's both it can be we still continue to have strong channel partners, but we're also getting deals directly.
So it can either be from the ERP from the value added resellers and system integrators or direct and I'd say all are very very important.
Two two to the sales process.
Great. Thanks, guys appreciate it.
Thank you. Our next question comes from Scott Berg with Needham <unk> Company. You May proceed with your question.
Hi, Archie and Kim Congrats on a really strong sales quarter those customer additions were were quite good.
I guess first question Archie.
A lot of the questions I've had from investors over the last 90 days since your last call was around how much of the improved e-commerce environment from the pandemic is aiding your overall business.
At least the incremental change whether its drop ship or more.
Or retailers, just needing more vendors et cetera, but.
But we've seen two big retailers in this space or I guess ecommerce vendors and shopify. Its night after the close Amazon put up some kind of disappointing sales from there.
Commerce area.
I think it's natural to expect ecommerce to slow here going forward after the pandemic, but does that change in in customers moving from online to offline at all in the current macro environment, maybe shift how you think about demand for your products here over the next couple of years.
Thanks, Scott I think when we think of the retail world. We really think it's moving to a true omnichannel, whereas before it was e-commerce and brick and mortar and even when companies had both they were separate and now youre seeing a much more integrated play drop drop ship.
Pick up at store and they're really looking for a omnichannel experience and this is where we think as a company in our space. We are uniquely situated to be able to deliver.
For our customers on that omni channel experience. So this is where it's nice to be in both spots.
If one goes down and the others.
Yeah.
<unk> up and we did expect.
E Commerce has been accelerating for a long period of time now, but it had an extra amount of acceleration for the first year of the pandemic and then we're seeing that slow down.
Back to historical levels and then we.
We've had some pickup in stores, so we're more or less indifferent, where it comes but.
But the stressing of omni channel I think it's very very important to us and the retailers are realizing what we need to be ready either way and ultimately that's what Jahmi channel is it's allowing the consumer to buy when and where they want I mean, that's our that's how we think of omni channel.
Alright, and then from a follow up perspective on the new share reproach repurchase program I guess, it's not a surprise since you've had one in place before but how should we think about capital allocation and your general kind of M&A strategy going forward, you're a bigger company today than what you were three or four years ago, obviously your throat.
Better cash levels.
Is there an opportunity may be see a larger more transformative type of acquisition that sometime whether you're consolidating market or something else versus some of the bite size.
Kind of acquisitions that have been smart they've obviously ended the business properly, but they've been smaller in size.
Sure. So there's sort of two questions in there I'll tackle the capital allocation first and then we can dig a little deeper on the M&A side. So from a capital allocation perspective, as you would expect the board.
Discusses this periodically and as a company we are cash flow positive, so where youre seeing the opportunities for capital to be deployed their stock buyback and then there is M&A opportunities for us as well so nothing really new there just sort of restating sort of.
Our capital allocation.
Our approach has been.
Specific on the M&A side, we remain acquisitive, our lens tends to be somewhat narrow in the lens of primarily in the retail space.
Where there's a network involved.
Software as a service and then we look for in there we've done all different types of acquisitions. Some that are pure rollout customer acquisition. Some that are geographic expansion and.
Then some and more recently you've seen it on the product side and we certainly think that there continues to be opportunity in all of those areas.
You've seen it again on the product side. So we will continue to.
To look to see what makes sense for us. We believe we are clearly the leader in what we're doing we're not compelled to do acquisitions, but we certainly have the capital at our disposal.
And we will continue to.
To acquire if it makes the bulk of the business and the financial facts.
Yes.
Great. Thanks for taking my questions and congrats on a great quarter again.
Yeah.
Thank you. Our next question comes from Jeff Van <unk> with Craig Hallum. You May proceed with your question.
Great. Thanks, Hey, guys. Thanks for taking my questions.
Just a couple for me I think Tim just to start with gross margins.
It dipped down I don't recall I think you had guided a few things we're going to change their last quarter. Just update me on gross margins what hit in the quarter and how to think about next few quarters.
Sure, Yes to your point last quarter, we had mentioned when we provided our expectations for EBITDA for the quarter and for the full year. We had said that based on the strong fulfillment momentum as well as the.
Great customer adds that we've been seeing that.
That we would be investing in a couple of different areas in the business specific in Q3.
Really focused on the customer experience or customer success side and what's great in the quarter as we had lots of opportunity to get great talent on board and make sure that we are hiring and retaining great talent on the customer experience to help us get our customers up and running and getting value just as as quickly as possible.
We also made a comment that we would be adding sales resources, particularly as we think into 2022.
And that last part has been taken into account relative to our guidance that we just gave for Q4 2021.
And just Directionally, how do you think about it in Q3 to four.
As far as gross margins or well, but in general we've you we provide EBITDA and so you can back into what the implied EBITDA margin is we don't typically give that specific color on our quarter Youll see our actual results, but what I can say more broadly.
<unk>.
Is we will absolutely make sure that we're investing appropriately in both the short term and long term and we are very focused to make sure we have a.
And continue to have an amazing customer experience to delight, our customers and exceed their expectations. However longer term nothing has changed relative to our view that we do expect gross margins to be at least in the low seventies.
Okay.
That's fair and then just I guess at a higher level, though on the quarter I think you've talked about the carrier services product and certainly with the network you've got in place. It just always is felt there was a lot of room to cross sell into this space other incremental capabilities. So I guess two questions. Just what have you seen in terms of the uptake on the carrier services product and how do you see.
Think about the evolution of incremental products to introduce into the customer base sort of steady as we go will we see any acceleration just what does the pipeline of new product look like so I guess two questions embedded in there.
Nice start with carrier service and that obviously earlier, we announced we expanded that service to partner with C. H Robinson, which we think is a world class company.
And also gets us into a broader part of the carrier service market.
Which we think is will continue to accelerate that growth. We are excited about being able to continue to expand our Tam and add additional services. So I wouldn't see a massive acceleration in 2022, but I think there is opportunity to continue to buy.
Build.
And partner with companies to expand these services, sometimes its obviously if you have a C H Robinson.
Very large successful company, we're going to partner with.
We're not obviously not going to buy.
I think there's other opportunities as we move forward to make acquisitions and in some cases also just to build so we're very excited about where we're going in the future on on that front.
One brief last from me if I could then just as it relates to the overall logistical mess going on in the country ports and otherwise.
How is that reflecting in terms of your pipeline or interest levels in your products. If it has at all.
It's something we've talked about I think theres two things that we consider almost a deal by deal headwind or tailwind, Jeff one is inventory more along the lines of what we call inventory challenges can they get inventory and that it connects in some cases accelerate deals and in some cases decelerate or slow down deals it's almost.
It's almost a case by case, so actually when we think of 2022 we.
We didn't put it in the headwinds that we didn't put it in tailwind first time in my career, we actually had a section called headwinds tailwind deal by deal.
Others labor within our work within our customer base. They are ready to move we will save them labor, but do they have the resources to move it forward. So those are two things that on a deal by deal basis are actually sometimes helping us and sometimes negatively.
Affecting us.
Got it great. Thanks.
Thank you. Our next question comes from Jason <unk> with Keybanc capital markets. You May proceed with your question.
Great. Thanks for taking my questions here.
Maybe one priority.
Drop ship, it's been an important area of strength.
Interesting.
Week to see.
From private funding for some other <unk> vendors looking to enhance their drop ship capabilities.
Certainly validates some of the tailwind so you've been talking about.
But maybe as it relates to competition, how do you see the competitive environment today for drop ship and maybe where do you where do you see it going.
Yes, our competition, what we rely on.
When our deals is our is our incredibly strong retail network three.
<unk> 3000 retailers first and foremost that is our biggest.
Competitive advantage, which I think is going to take somebody a long time to catch up because you need to do that retailer by retailer and that is not a simple process.
I think the second thing, it's just easy to use technology that we built for.
20 years, I think our third big competitive positioning is our lead generation working with these retailers so getting thousands of leads and onboarding suppliers for retailers and having the unique ability to do that in times that are.
110th of the industry norms is that and then really coming back to that whole omnichannel, we're seeing people either attack.
The wholesale side the e-commerce side and they go after one or the other because it's very hard to do all.
And what we're seeing is it is truly I think the biggest pivot.
As it has become not a more ecommerce world, it's becoming more omnichannel world.
So youre seeing brick and mortar players really use that omnichannel and they are using their stores as distribution center and that's where we're really well positioned so when I hear people just think about drop ship and they don't think about it in the Grand scheme of things you.
You don't have drop ship suppliers and suppliers that shipped to the distribution center its SKU by SKU and that can move month by month, where they're going so I think that's where we're really excited and why we're seeing.
An acceleration and the positioning we have.
Interesting yeah makes sense.
And then maybe one quick one for Kim.
<unk> talked about it a little bit bringing on some great talent and third quarter, but how are you feeling about sales productivity heading into next year I know, it's a it's a tough hiring environment for every company at the moment.
Just curious how you guys are feeling.
Yes, so we have a great sales force and we will continue to add resources that will give us even more capacity so feeling really good going into 2022.
And again, we have a lot of visibility of the opportunity that we see ahead of us in 2022. So we make sure that we have again, great already internal talent, but then we will be adding additional resources to help us.
Maintain the the capacity based on the opportunities that we see there there's still opportunity for us to get even more efficient in that area.
But.
A lot of the work that has been done over the last few years has set have set the team up very well.
But again, we will be adding some resources in Q4 based on the opportunities that we see in 2022 and I think our strength for the sales group is not only strong leadership at the top but the depth of the leadership and the sales team and then also our sales training.
We do.
Just a phenomenal world class job from a from a training standpoint, we actually have a simulated distribution center and our office. So people can actually experience what it's like to be at a retail headquarters.
Mimicking a distribution center. So I think the training group also within all of Sps and within <unk>.
And within that sales is also a huge competitive advantage in both recruiting and retaining talent.
Okay perfect good stuff.
Thank you. Our next question comes from Joe <unk> with.
Sir you May proceed with your question.
Yeah.
Great.
Tim.
First I don't know what the Vera Wang coastal Hello, Bello went down so I suppose I should be.
Yeah.
Sure.
Okay.
Yes.
Maybe I'll start just with the initial EBITDA outlook for next year.
Signaling a 18% growth.
And I guess in the context of a 15% to 25% growth framework does the 18 is the read there that maybe next year is a little heavier of an investment year.
And if that is true does that also have an implication for revenue growth when do you foresee being able to invest and maybe actually some accelerate some top line within the scope of 'twenty two.
So when we think about I'm, just going to do one step back and just sort of remind from a quarter ago. We had provided our views that we believe we can drive top line to be 15% or greater for the foreseeable future and we believe that we have the ability to drive EBITDA dollar growth between somewhere between sort of that <unk>.
25% year over year for the foreseeable future.
Specific on the EBIT side, you May know before we had mentioned it about a 20% year over year growth and so now that range has its slightly larger to 15% to 25%.
The reason for changing that range from 20 to be a little bit broader 15 to 25.
To take into account. The fact that we've had great momentum on the fulfillment side for a lot of the reasons Omnichannel that our teeth mentioned on this call and we want to make sure as we had that great momentum, adding a lot of customers, helping customers even more that we make sure we have the appropriate rate.
Sources to not only meet their needs, but exceed exceed their needs and expectations and so that sort of weighs into the spend sort of in the back half of 2021 is we want to make sure that we have the appropriate resources really to keep pace with that does great momentum that we've seen.
So those types of investments for call it sort of the short term and long term would be some reasons why you'd see it on the lower end closer to the 15%.
Some years, you may see it closer to the high end, which would be up to that 25% and that's because as we continue to grow theres lots of scaling opportunity still in front of us. So the way you can look at 2022 specifically.
With the expectations that we've given is that that does take into account the investments that we're making to make sure that we're doing everything appropriate for all of these are great new customers and great opportunity that we see in front of us. So we're going to make that investment for the short term and then there's also the investment that helps us in the longer term and then naturally you will see some.
Scaling over time that will translate out of those investments as well, but specific to 'twenty two youll see it more on the lower part of that range versus the higher part based on what we just sat on our earnings call.
Okay.
That's good context.
My second question.
Second quarter in a row that analytics grew at a double digit pace is there may be some.
Building momentum or can you can you maybe speak to is double digit crowds, maybe you don't want to underwrite this as a new baseline going forward, but has something changed in terms of the conversation, you're having with customers or the traction youre seeing in the marketplace.
Yes, I think overall I mean.
Remind everybody, where we were going into the pandemic, we were feeling really good about analytics and we had a fair amount of momentum.
<unk> 2019, and then.
As we thought it would analytics got hurt hit significantly harder.
And then we also had.
Some relief we gave to customers in Q2 and Q3. So we have some degree of lapping easier comps, but we clearly see momentum within the analytics team and the analytics group and feel pretty good again, we've always felt good about the product long term, but we're starting to see some some momentum.
In that product in the field feel good that it's starting to carry more of its weight and I think the team is executing extremely well from both the sales side, but also the customer success side and the technology side.
And so what we're seeing is maybe just circling back to the pipeline that was in place entering 2024.
A lot of reasons, maybe was not executed upon.
I think thats right I think there is a momentum coming back on the momentum and then.
That product was more subject to people putting projects on hold because it's a discretionary spend or reducing the amount of their spend.
In 2000, and especially as we look at early 2020.
People really didn't know where we were going I mean, when you look at the big back to March April May June.
We thought the world might be in for an economic disaster at that point and people are very very cost conscious on that front.
Okay I will leave it there. Thank you thank.
Thank you.
Thank you. Our next question comes from Mark Chappell with Loop capital You May proceed with your question.
Hi, Thank you for thank you for taking my question.
Archie starting with you going back to the recently.
The recently announced partnership with CH Robinson I was wondering if you can just provide some additional color around how you will be working together.
What was what was C. H Robinson doing before us because commerce really using another vendor with some manual process, maybe you could just shed some light on that.
Yes, so I would guess in the majority of cases it was out for their for their customers. It was outside the Adi process and so if our customers were using for instance, if we had customers using CH Robinson they were using C. H Robinson, they're using Sps commerce, but it wasn't in an integrated fashion and in other words, you Couldnt ask.
<unk> CH Robinson.
Their Apis and their network without leaving the Sps Commerce platform and so this gives the customers.
An integrated experience and a very quick easy way to access.
C H Robinson.
I think this is a this expands our carrier service, obviously theyre not really in the small package area, but on the LDL.
Area I mean, that's where that's where there is strong and we think they're a world class company.
I think it's a real advantage to our customers obviously, a revenue generator and then it's a really nice positive for them as well and so we have really strong support from C. H Robinson.
Which we appreciate as well.
Okay, great. Thanks, and then Kim.
One question for you when <unk> was acquired I think they are expected to add about 5 million revenue a quarter and.
I was wondering if it's just fair to assume that the database business came in.
Around that ballpark this quarter.
Sure. So the data Masons business has continued to trend about 10% greater than what our original expectations were so we thought that the last couple of quarters. We also did see that in Q3 as well.
Great. Thank you.
Thank you. Our next question comes from the haul trucks.
Got some capital you May proceed with your question.
Oh, yes. Thank you.
Great quarter again.
Staying on data Masons have you seen some success.
Converting some of the nonrecurring to recurring revenue.
Well, yes, absolutely.
The nice thing about the acquisition, which which we speculate it would be the case.
As opposed to convincing somebody that they ought to do it differently.
Microsoft is really leading the charge so it just becomes a natural.
Change event when somebody moves from.
The Microsoft on premise two D 365, it becomes a natural time for them to convert into recurring revenue in the full service solution that Sps commerce and that is happening as we speculated.
Great and then.
So overall revenue decelerated from 25% year over year growth of 23% growth June to September that the recurring revenue accelerated from 18% to 20% and so is this.
The success with the data masons converting from Marvell crash recurring the main driver behind that was there something else going on as well.
So the.
Just to reiterate the numbers the GAAP revenue, 25% last quarter. This quarter 23, the recurring revenue last quarter at 22. This quarter 2018 was a Q1 number that youre referencing just say ya.
Bob.
Got you.
And one of the reasons as it relates to the <unk>.
25 billion to 23, or the 22 going to 'twenty I do keep in mind that last year. So this is really has to do with more of a comparison to last year Q3 was the first quarter, where we started to see that pretty large significant acceleration on the fulfillment side and Q3 is now it is the first quarter, we're lapping that.
Got it understood.
And then you had to.
So I think the strongest customer add quarter on an organic basis.
Cool.
Continuous accelerates each quarter continues to be even better.
Is the driver behind that again.
Sure. So if you look at the last I believe four quarters, you've seen nice customer ads.
And this quarter to your point is as that height high highest from a call it that organic growth perspective.
The reasons for that really have to do with that community enablement campaigns. So, it's where we have relationships with retailers and we're really helping them do something different and we roll that out to add to the vendor community and so Q3 was another strong quarter of community enablement activity.
Great. Thank you.
Thank you and as a reminder to ask a question you will need to press star one on your telephone. Our next question comes from Parker Lane with Stifel. You May proceed with your question.
Hi, Ken My Archie it's maxed out in no time.
For Parker.
I just wanted to start thinking about 200000 potential supplier figure that's been thrown around in the past.
Has that changed.
The number of suppliers, maybe has gone up or down with the rise of drop shipping in ecommerce and even direct to consumer over the last couple of years.
Yes, I'm not sure what exactly the number is but we think our Tam substantially higher just for the simple fact that we can also do business with non Adi retailers right, if you're a supplier.
And the orders and Thats one of our big.
Big initiatives going forward is making sure that for suppliers, we can capture all the orders regardless of how they are getting them. So that they can utilize our add on services. So think about our carrier service and Youre going Okay. That's great. It's it's integrated right into my ASN and working with my Adi retailers, but I want to make sure I have the orders for my non Adi.
Retailers, so I think it continues that.
Continues to grow and just naturally the number of suppliers retailers are working with today continues to grow as well.
Got it and then just following up on some of those questions earlier about analytics and kind of the uptake of customers considering it. Once again is there any other technology priorities that youre seeing that are coming along with that analytics.
Thought process or is it mostly just analytics.
Mostly just analytics, but.
Remember analytics starts taking an even more important role.
For the retailer when their stores become distribution centers and making sure that.
Now suppliers want to make sure they are partnering properly to get the right inventory at the right stores because the stores are now part of the E Commerce solution.
And so it's not just a matter of having inventories having it at the right place as well.
As you can see some many retailers they can do same day delivery or overnight delivery fairly easily when it's coming from the store.
So we think there is a increased importance.
From analytics going forward as we become a more omnichannel world.
Yes that makes a lot of sense. Thanks, congrats on the quarter.
Thanks.
Thank you and I'm not showing any further questions. At this time. This concludes today's conference call. Thank you for participating you may now disconnect.
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