Q4 2021 SPS Commerce Inc Earnings Call

Speaker 1: one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Hermina Blastir. Please go ahead.

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Acquire any further assistance. Please press star Zero I would now like to hand, the conference over to your speaker today are Mino glass chip. Please go ahead.

Speaker 2: Thank you, Josh. Good afternoon, everyone. And thank you for joining us on SPS Commerce fourth quarter and full year 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 attraction and penetration with retailers and other customers.

Thank you Josh and good afternoon, everyone and thank you for joining us on Sps Commerce fourth quarter and full year 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.

Speaker 2: These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially.

Statements are forward looking and then both a number of risks and uncertainties that could cause actual results to differ materially.

Speaker 2: 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 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.

Speaker 2: Please refer to our SEC filings, specifically our Form 10-K , as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available at our website, spscommerce.com, and at the SEC's website, sec.gov. In addition, we are providing a historical data sheet for easy reference on our investor relations section of our website, spscommerce.com.

Please refer to our SEC filings, specifically, our Form 10-K as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available on our website Sps commerce dot com and the SEC's website SEC Gov. In addition, we are providing a historical.

Data sheet for easy reference on our Investor Relations section of our website Sps Commerce Dot com during.

Speaker 2: During our call today, we will discuss adjusted IBDAA financial measures and non-GAAP earnings per share. In our press release and our final presentation, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures. And with that, I would like to turn the call over to Archie. Thanks.

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

Each of which is posted on our website.

You'll find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures and with that I would like to turn the call over to Archie.

Thanks, Sara and welcome everyone.

Speaker 3: 2021 marks another year of strong execution and profitable growth for SPS Commerce, as retail dynamics continue to emphasize the need for fulfillment automation and supply chain efficiency.

2021 marks another year of strong execution and profitable growth for Sps commerce as retail dynamics continue to emphasize the need for fulfillment automation and supply chain efficiency.

Speaker 3: Since the pandemic began, consumer shopping habits forced retailers and suppliers to embrace a true omnichannel strategy.

Since the pandemic began consumer shopping habits forced retailers and suppliers to embrace a true omni channel strategy in.

Speaker 3: In addition, ongoing disruption across the global supply chain was intensified by unanticipated spikes in consumer demand, port delays, and labor shortages.

In addition, ongoing disrupt disruption across the global supply chain was intense intensified by unanticipated spikes in consumer demand port delays and labor shortages.

Speaker 3: Overnight, supply chain automation became a priority for the retail industry and SPS Commerce was instrumental in connecting thousands of suppliers and retailers to overcome inventory constraints and get products to consumers.

Overnight supply chain automation became a priority for the retail industry and Sps Commerce was instrumental in connecting thousands of suppliers and retailers to overcome inventory constraints and get products to consumers.

Speaker 3: Our add-on solutions such as carrier service and streamline connections to e-commerce platforms and marketplaces are helping our customers execute a true on-the-channel strategy and represent a growth opportunity while expanding our addressable market.

Our add on solutions, such as carrier service and streamline connections that e-commerce platforms, and marketplaces are helping our customers execute a true omnichannel strategy and represent a growth opportunity, while expanding our addressable market.

Speaker 3: The need for supply chain automation continued to fuel demand for EDI.

The need for supply chain automation continued to fuel demand for Adi.

Speaker 3: For the full year, revenue grew 23% to $385.3 million. Recurring revenue grew 20% year over year, led by fulfillment growth of 22%.

For the full year revenue grew 23% to $385 $3 million.

Recurring revenue grew 20% year over year led by fulfillment growth of 22%.

Speaker 3: We're also seeing acceleration in analytics, which grew 10% in 2021, as retailers are adopting omni-channel fulfillment strategies and leveraging stores for distribution, making point-of-sale data critical in optimizing product sales and inventory.

We're also seeing acceleration in analytics, which grew 10% in 2021 as retailers are adopting omnichannel fulfillment strategies and leveraging stores for distribution, making point of sale data critical in optimizing product sales and inventory.

Speaker 3: Net new customer ads increased by 40% in 2021, which excludes the recent Genius Central acquisition.

Net new customer adds increased by 40% in 2021, which excludes the recent genius central acquisition.

Speaker 3: Following organic growth of 27% in 2020, as retailers, brands, and suppliers continue to prioritize automation and a consumer-centric fulfillment strategy.

Organic growth of 27% in 2020 as retailers brands and suppliers continue to prioritize automation and a consumer centric fulfillment strategy.

Speaker 3: Stitch Fix, a leading e-commerce personal styling service, needed to completely overhaul their technology landscape to enable ongoing business expansion.

Stitch fix a leading e-commerce personal styling service need to completely overhaul their technology landscape to enable ongoing business expansion.

Speaker 3: They chose SPS for our ability to onboard vendors in volume, provide full service support, and offer expertise in vendor and distribution management.

They chose Sps for our ability to onboard vendors and volume provide full service support and offer expertise and vendor and distribution management.

Speaker 3: Williams-Sonoma, a multi-channel specialty retailer of high-quality home products, was focused on expanding its ship-to-consumer distribution channel capabilities since early 2020 and engaged with SBS to onboard over 500 dropship vendors to EDI.

Williams Sonoma, our multichannel specialty retailer of high quality home products was focused on expanding its shipped to consumer distribution channel capabilities. Since early 2020 and engaged with Sps to onboard over 500 dropship vendors to Adi.

Speaker 3: Osborne, the world's largest surface treatment and finishing provider, faced several challenges with its SAP EDI system.

Osborn the world's largest surface treatment and finishing provider based several challenges with its SAP.

System.

Speaker 3: Many SAP EDI solutions require significant ongoing maintenance from IT teams to meet EDI requirements or to add trading partners.

Many SAP <unk> solutions require significant ongoing maintenance from teams to meet <unk> requirements or to add trading partners.

Speaker 3: Making changes to the SAP system itself can be difficult and cost.

Making changes to the SAP system itself can be difficult and costly.

Speaker 3: Osborne deployed SPS fulfillment for SAP and was able to avoid hiring staff to support EDI operations, improve their order fulfillment performance, and freed up resources to focus on the company's strategic initiatives.

Osborn deployed Sps fulfillment for SAP.

And was able to avoid hiring staff to support <unk> operations.

Improve their order fulfillment performance and freed up resources to focus on the company's strategic initiatives.

Shields, one of the largest sporting goods retailers in America, and a longtime Sps partner made Adi a requirement for all of their vendors.

Speaker 3: Shields, one of the largest sporting goods retailers in America and a long-time SBS partner, made EDI a requirement for all their vendors.

Speaker 3: They worked with SBS to quickly onboard their suppliers and now send over 95% of their purchase orders via EDI.

They worked with Sps to quickly onboard their suppliers and now stand at over 95% of their purchase orders via Adi.

Speaker 3: Their products are stocked on the floor within 48 hours of delivery, instead of weeks, despite a reduction in labor hours.

Their products are stocked on the floor within 48 hours of delivery instead of weeks, despite a reduction in labor hours.

Speaker 3: With approximately 1,700 brands present in stores at any given time, it's been a win-win for both Shields and their vendors to automate their trading partnership.

With approximately 7500 brands present in stores at any given time, it's been a win win for both Sheila and their vendors to automate their trading partnerships.

Speaker 3: Buck Ease, a gas station and convenience retailer with approximately 40 stores across the U.S. and a growing number of locations, needed to increase efficiencies throughout the supply chain by improving visibility into shipments and inventory.

<unk>, a gas station and convenience retailer with approximately 40 stores across the U S and a growing number of locations needed to increase efficiencies throughout the supply chain by improving visibility into shipments and inventory.

Speaker 3: In conjunction with an ERP update, luck is his name aiming to automate order fulfillment across all the vendors and chose SPS for their EDI solution.

In conjunction with an ERP update <unk> is aiming to automate order fulfillment across all of their vendors and chose Sps further Adi solution.

Speaker 3: Hello Bello, a family and baby product company embraced evolving retail dynamics and migrated their on-premise solution to a cloud ERP and selected Microsoft Dynamics 365.

Hello, Bello, a family and baby product company embraced evolving retail dynamics and migrated their on premise solution to a cloud ERP and selected Microsoft dynamics 365.

Speaker 3: Having signed a one-year exclusive contract with Walmart, they had to ensure their operations could handle the expected volume.

Having signed a one year exclusive contract with Walmart the head to ensure their operations could handle the expected volume.

Speaker 3: Thanks to SBS's vast network and expertise in Microsoft ERP integration, hella bella went from sign-on to go live in a matter of weeks.

Thanks to Sps's vast network and expertise in Microsoft ERP integration Hello, Bello went from sign on to go live in a matter of weeks.

Speaker 3: Lastly, to strengthen our leadership in food retail and distribution, we recently acquired Genius Central, a leader in in-isle ordering for natural and specially food growth.

Lastly to strengthen our leadership in food retail and distribution, we recently acquired genius Central a leader in an aisle ordering for natural and specialty food grocers.

Speaker 3: SPS's competitive differentiation and our ability to expedite trading partner onboarding is rooted in the size of our network, our world-class products and people, and the strategic acquisitions we made over the years to facilitate integration of the SPS solution to our customers ER pieces.

Sps is competitive differentiation and our ability to expedite trading partner Onboarding is rooted in the size of our network, our world class products and people and the strategic acquisitions, we made over the years to facilitate integration of the Sps solution to our customers' ERP system.

Speaker 3: Our investments are accelerating our growth while expanding our addressable mark.

Our investments are accelerating our growth, while expanding our addressable market.

Speaker 3: SPS has grown from a groundbreaking disruptive idea into the largest retail cloud service and the industry's first integrated suite of products are protected for today's Omni Channel retail world.

Sps has grown from a groundbreaking disruptive idea into the largest retail cloud service and the industry's first integrated suite of products Architected for today's Omnichannel retail world.

Speaker 3: I would like to thank all of our employees for their steadfast dedication to the company and our customer success.

I would like to thank all of our employees for their steadfast dedication to the company and our customer success.

Speaker 2: With that, I'll turn it over to Kim to discuss our financial results. Thanks, Archie. We had a great fourth quarter. Revenue for the quarter was $102.8 million, a 23% increase over Q4 of last year, and represented our 84th consecutive quarter of revenue growth. Recaring revenue this quarter grew 21% year over year. Adjusted EBITDA increased 21% in the quarter to $27.7 million.

With that I'll turn it over to Kim to discuss our financial results. Thanks, Archie we had a great fourth quarter revenue for the quarter was $102 8 million a 23% increase over Q4 of last year and represented our 84th consecutive quarter of revenue growth.

Revenue this quarter grew 21% year over year, adjusted EBITDA increased 21% in the quarter to $27 $7 million for.

Speaker 4: For the year, revenue was $385.3 million, a 23% increase, and recurring revenue grew 20%. The total number of recurring revenue customers increased 13% year over year to approximately 37,500, and while a share increased 9% to 10,000, 50%.

For the year revenue was $385 $3 million, a 23% increase and recurring revenue grew 20%.

The total number of recurring revenue customers increased 13% year over year to approximately 37500 and wallet share increased 9% to 10050 as.

Speaker 4: As a reminder in November 21, we announced the acquisition of Genius Central, which added approximately 1,700 customers to our network.

As a reminder, in November 21, we announced the acquisition of Chinas Central which added approximately 700 customers to our network.

Speaker 4: Adjusted EBITDA on 23% to $107 million. We ended the year with total cash and investments of $257 million and repurchased approximately $20 million of SPS shares.

Adjusted EBITDA of 23% to $107 million, we ended the year with total cash and investments of $257 million and repurchased approximately $20 million of Sps shares.

Now turning to guidance.

Speaker 4: For the first quarter of 22, we expect revenue to be in the range of $103.8 million to $104.8 million. For the full year, we expect revenue to be in the range of $442.5 million to $445.5 million, representing approximately 15 to 16 percent growth over 2021.

For the first quarter of 'twenty, two we expect revenue to be in the range of $103 8 million to $104 $8 million for the full year, we expect revenue to be in the range of $442 5 million to $445 $5 million, representing approximately 15% to 16% growth over 2021.

Speaker 4: For the first quarter of 22, we expected just to EBITDA to be in the range of 28.8 million to 29.3 million dollars. For the full year, we expected just to EBITDA to be in the range of 125 million to 126.5 million dollars, which is higher than the 124 million to 126 million previously communicated on the Q3 2021 earnings conference call, and represents 17 to 18 percent growth over 2021.

The first quarter of 'twenty, two we expect adjusted EBITDA to be in the range of $28 8 million to $29 3 million.

For the full year, we expect adjusted EBITDA to be in the range of $125 million to $126 $5 million, which is higher than the $124 million to 126 million previously communicated on the Q3 2021 earnings conference call.

And represents 17% to 18% growth over 2021.

Speaker 4: For Q-1-22, we expect fully diluted earnings per share to be in the range of 24 to 25 cents, with fully diluted weighted average share without standing of approximately 37.3 million shares. We expect non-gap diluted earnings per share to be in the range of 46 to 47 cents, with stock based compensation expense of approximately $9.2 million, depreciation expense of approximately $4 million.

For Q1, 'twenty, two we expect fully diluted earnings per share to be in the range of 24% to 25.

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 46 to 47.

With stock based compensation expense of approximately $9 2 million depreciation expense of approximately $4 million.

Speaker 4: an amortization expense of approximately $2.5 million.

Amortization expense of approximately $2 $5 million for the full year 2022, we expect fully diluted earnings per share to be in the range of $1 15 to $1 18.

Speaker 4: For the full year 2022, we expect fully deluded earnings for share, which has been the range of $1.15 to $1.8.

Speaker 4: We expect fully to do it a weighted average shares outstanding of approximately 37.5 million shares.

Expect fully diluted weighted average shares outstanding of approximately 37 5 million shares.

Speaker 4: expect non-gaveluted earnings per share to be in the range of $1.99 to $2.02 with stock based compensation expense of approximately $35 million.

We expect non-GAAP diluted earnings per share to the range of $1 99 to $2 and two with.

With stock based compensation expense of approximately $35 million, we expect depreciation.

Speaker 4: We expect appreciation expense of approximately $18.1 million, and we expect amortization expense for the year to be approximately $10 million.

Depreciation expense of approximately $18 $1 million and we expect amortization expense for the year to be approximately $10 million.

Speaker 4: For the year you should model approximately 30% effective tax rate calculated on GAP pre-tax net earn.

For the year, you should model approximately 30% effective tax rate calculated on GAAP pretax net earnings.

Speaker 4: Beyond 2022, we maintain our annual revenue growth expectations of 15% or greater, and we continue to expect adjusted EBITDA dollar growth of 15 to 25%, as we invest in the business to capitalize on market dynamics and support current and future growth. In the long term, we maintain our target model for adjusted EBITDA margin of 35%.

Beyond 2022, we maintain our annual revenue growth expectations of 15% or greater and we continue to expect adjusted EBITDA dollar growth of 15% to 25% as we 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 of 35%.

Speaker 4: In summary, SPS Commerce delivered strong fourth quarter and full year 2020 results, culminating in two firsts.

In summary, Sps Commerce delivered strong fourth quarter and full year 2020 results, culminating in two first quarterly revenue greater than $100 million in annual adjusted EBIT dollars greater than a $100 million.

Speaker 4: Quarterly revenue greater than a hundred million dollars and annual adjusted e-button dollars greater than a hundred million dollars

Speaker 4: For film and automation and the need for supply chain efficiencies, continue to drive demand for EDI. And SPS is well positioned to capitalize on evolving retail dynamics with our growing portfolio of solutions and expanding addressable market. With that, I'd like to open the call to questions.

The film in automation and the need for supply chain efficiencies continue to drive demand for Adi and Sps is well positioned to capitalize on evolving retail dynamics with our growing portfolio of solutions and expanding addressable market with that I'd like to open the call to questions.

Okay.

Speaker 1: Thank you, as a reminder, that a question you'll need to press star one on your telephone to withdraw your question press the panel.

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question, Chris the pound key.

Speaker 1: Our first question comes from Scott Berg with Needham. You may proceed with your question.

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

Speaker 3: Hi, I'm Shane Kim, Kyrsten Goodquarter, and the metrics look fantastic. I guess RG, let's start off with the general kind of state of the ecosystem. You all raised your growth rates a couple quarters ago, the annual growth rate over the intermediate term. Obviously, Kim's guidance sounds like you still feel very confident in the macro environment. But a question I continue to get when thinking about FFES Commerce is, the business seemed like it had a benefit from the pandemic.

Hi, Archie and Kim Congrats on a good quarter and the metrics looks fantastic.

<unk>, let's start off with a general kind of state of the ecosystem you. All have raised your growth rate a couple of quarters ago. The annual growth rate over the intermediate term, obviously kim's guidance sounds like you still feel very confident in the macro environment, but a question I continue to get when thinking about Sps commerce is the business seemed like it had a.

Benefit from the pandemic, how should we feel about the I guess those benefits really being sustainable over the next two or three years are there incremental or different drivers that youre seeing that will drive the business.

Speaker 3: How should we feel about the, I guess those benefits really being sustainable over the next two or three years? Are there incremental or different drivers that you're seeing that will drive the business, you know, it kind of more forward or extend the momentum?

Kind of more forward or extend the momentum that you're seeing.

Speaker 3: Yeah, when I look back, I think there was some benefits in 2020-2021 as the world is truly accelerated to an Omni Channel World. We're moving along on e-commerce. We're moving along on brick and mortar, but it really wasn't an Omni Channel World. And I think that is a driver. But I think Scott, more importantly, what's really driving our acceleration from three, four years ago is our investments in our strategic initiatives.

When I look back I think there was some there was some benefits in 2000 22021.

As the world is truly accelerated to an Omnichannel world, We're moving along on E. Commerce, we're moving along on brick and mortar, but it really wasn't an omnichannel world and I think that is a driver, but I think Scott more importantly, what's really driving our acceleration from three or four years ago is our investments in our strategic.

<unk> initiatives, we start investing in demand generation.

Speaker 3: We start investing in demand generation.

Speaker 3: marketing more aggressively, customer success, we made some investments, especially on the retail side. In 2018, we re-organized the sales organization,

Marketing more aggressively customer success, we made some investments, especially on the retail side in 2018, we reorganized the sales organization, which.

Speaker 3: It was probably more painful than I anticipated, but is now getting more gain than I would have anticipated. We rolled out a brand new fulfillment.

Was probably more painful than I anticipated, but is now getting we're getting more gain than I would have anticipated.

We rolled out a brand new fulfillment.

Speaker 3: platform in 2017 with new go-to-market strategy over the next couple years. So I think that actually what's happening more for SBF commerce is it's more a culmination of our investments that we've made in 1617, 1819.

Platform in 2017 with new go to market strategy over the next couple of years. So I think that actually what's happening more for Sps Commerce is it's more a combination of our investments that we've made in 16 17, 18, 19 that really start benefiting.

Speaker 3: that really start benefiting us in 2021, 2022 and beyond. So I think some slight positives with the pandemic or acceleration in the Omni Channel world, but I think it's actually more driven bar strategic in this.

In 2000, 22021, 2022 and beyond so I think some slight positives with the pandemic or acceleration in the Omnichannel world, but I think it's actually more driven by our strategic initiatives.

Speaker 3: Got it helpful. And then from a follow up perspective, Archie, I know you mentioned that analytics grew 10% in the year. 2020 was a poor growth year for that as analytics fell in the priority stack of your customers. But does 10% feel like the right growth rate for analytics going forward? Now that hopefully that environment is normalized or do you think there might be more puts and takes that might move that needle one way or the other as we look at counts.

Got it helpful and then from a follow up perspective, Archie I know you mentioned that.

Analytics grew 10% from the year 2020 was a poor growth year for that is.

As the analytics that will fill in the priority stack of your customers, but does this 10% feels like the right growth rate for analytics going forward now that hopefully that environment normalized or do you think there might be more puts and takes that might move that needle one way or the other as you look at calendar 2002. Thank you.

Speaker 3: You know, I think long-term, I view fulfillment being able to have, or analytics having the capability of growing consistent with fulfillment. I think in the current environment, I think we can...

I think long term I view fulfillment being able to have our analytics, having the capability of growing consistent with fulfillment I think in the current environment.

I think we can we've hit our mark and I feel somewhat confident being of being around the 10% Mark.

Speaker 3: We've hit a mark and I feel somewhat confidence being around the 10% mark plus or minus that were past where we were a year and a half ago. And that real confident of what the timing is to get analytics back to where it was pre-pandemic.

Or minus that were passed where we were a year and a half ago and not real confident of what the timing is to get analytics back to where it was pre pandemic, but pretty confident long term that it has it has a lot of opportunity.

Speaker 3: but pretty confident long term that it has a lot of opportunity. Great, that's all I have. We'll jump back into.

Great Thats, all I have I'll jump back in the queue. Congrats again.

Thanks Scott.

Speaker 1: Thank you. Next question comes from Jason Salino with Keebank. You may proceed with your question.

Thank you. Our next question comes from Jason <unk> with Keybanc you May proceed with your question.

Speaker 5: Hi, this is actually a dead end conversation. Can I, thanks for taking our questions. Maybe first one I have is probably more broadly.

Hi, this is actually better monetization.

Taking my question.

Maybe first one I have and probably more broadly.

Speaker 5: I was focusing some on verticals that have lag the broader market in terms of recovery. And I was expecting countries industries come back to normal or online, you know, back in 20 points.

Are you foreseeing some vehicles that kind of lagged the broader market in terms of recovery.

<unk> industry, you've come back to normal online Bakken pipeline too.

Speaker 3: you know we're not seeing as big a differentiation now as we did you know you're in a half a goal or even a year ago there's some companies per se that are are lagging but in general

We're not seeing as big a differentiation now as we did a year and a half ago or even a year ago.

Some companies per se that are lagging but in general.

Speaker 3: We're coming back to more of a normal pace.

We're coming back to more of a normal pace I think we're also coming back to a normal.

Speaker 3: I think we're also coming back to a normal, a more normalized growth rate in e-commerce as well.

A more normalized growth rate in e-commerce as well.

Speaker 6: Obviously we did not take a step back in the commerce.

Obviously, we have we did not take a step back can ecommerce, but we did not we did not see in 2021.

Speaker 6: But we did not see in 2021.

Speaker 6: the large gains that we saw in 2020. But e-commerce is...

Large gains that we saw in 2020.

But e-commerce is.

Speaker 6: It's a little bit hard to judge because each company does a little bit different. Each retailer does a little bit different. If you order something online and pick up from store, some retailers are counting that at store sales. Some are counting it as e-commerce sales. We view it as an omnichannel sale, so we're seeing much more of that.

It's a little bit hard to judge because each company does it a little bit different each retailer does a little bit different if you order something online and pickup in store. Some retailers are counting that as store sales. Some are counting as ecommerce sales we view it as an omni channel sale and so we're seeing much more of that.

Speaker 5: Great, that's helpful. And then there's just one more graph on the acquisition of junior central and like a nice addition. But maybe you just quickly comment on how the go-to-market motion is there. And maybe there's any sort of opportunity for SPS like quickly you run for the go-to-market efforts and maybe accelerate public adoption there.

Great. That's helpful. And then just one more congrats on the additional junior Central seems like a nice addition.

But maybe could you just quickly comment on how to go to market motion is there and maybe if there's any sort of opportunity for Sps quickly you back up the go to market efforts and maybe accelerate from there.

Speaker 6: Yeah, I think there were two parts of the Genius Central acquisition. One was a go-to-market motion, which was just like ours. And that has been fully integrated into our go-to-market and the quality people that we picked up in that acquisition have been integrated into our teams. So that part going fairly well. And then, I think as we go forward, this is much more of a retail sales.

Yes, I think there were two parts of the genius Central acquisition. One was a go to market motion, which was just just like ours and that has been fully integrated into our go to market.

The quality people that we picked up in that acquisition has been integrated into our teams so that part.

Quite fairly well and then I think as we as we go forward. This is much more of a retail sales reach.

Speaker 6: retail sales having that in the bag of the retailer and having some specialization and expertise to help the retail reps is really the motion. Again, this was a small tuck-in acquisition and I think it's a very good acquisition but I'm not expecting this to be a significant part of our revenue over the next coming five years. Thank you.

Our retail sales, having that in the bag of the retailer and having having some specialization and expertise to help there to help the retail reps is really the motion again. This was a small tuck in acquisition and I think it's a very good acquisition, but I'm not expecting.

<unk> this to be a significant part of our <unk>.

Revenue over the coming five years.

Got it thanks, a lot Keith thanks for the call it.

Speaker 1: Thank you our next question goes from Partler Lane with Steve Fowl. You may proceed with your question.

Thank you. Our next question comes from Parker Lane with Stifel. You May proceed with your question.

Speaker 7: Yeah, hi, Kevin Archie. Thanks for taking the question. Archie, you talked about this Omnichannel World we're now living in. Can you share maybe a sense of what share of your customer base hasn't fully embraced this Omnichannel vision yet? Some of these newer use cases like dropshipping and in-store pickup. And potentially how much incremental wallet share could you gain from those customers embracing this Omnichannel World of Renalyn?

Yeah, Hi, Kevin Archie Thanks for taking the question.

Are you talking about the Omnichannel World. We're now living in can you share maybe a sense of what share of your customer base Hasnt fully embraced this omnichannel vision yet some of these newer use cases like drop shipping and in store pickup and potentially how much incremental wallet share could you gain from those customers embracing omnichannel world that we're in.

Alan.

Speaker 6: you know it's a that's a good question parker and a little bit challenging but i'll take a little bit of a swag as long as everybody considers it a bit of a swag i think the vast majority have let at least embraced it but they're on a long term journey and i think there's two parts of the journey truly getting to have a true army channel full experience

That's a good question Parker and a little bit challenging, but I'll take a little bit of a swag as long as everybody considers it a bit of a swag I think the vast majority have at least embraced it.

But they're on a long term journey and I think there's two parts of the journey truly getting to have a true omnichannel full experience.

Speaker 6: with expanded aisle with drop ship is a long-term journey. And then the second piece that I think retailers are struggling with is they did a really good job of making sure that they could service their customers and the second phase is now how do we do it efficiently in effect.

With expanded aisle with drop ship.

<unk> is a long term journey and then the second piece that I think retailers are struggling with is.

They did a really good job of making sure that they could service their customers and the second phases now how do we do it efficiently and effectively.

Speaker 6: So I think we're in the very, very early days, but I think for the first time, retailers are...

I think we are in the very very early days, but I think for the first time.

Retailers are using their stores.

Speaker 6: as a competitive advantage against e-commerce as opposed to a negative. They're using the fact that there's a store by your house and they can do same-day delivery. They can do pickup and store. So I think we're very, very early in the transformation, but I think it has made a meaningful first start for many, many retailers.

As a competitive advantage against e-commerce as opposed to a negative they are using the fact that there is a store by your house and they can do same day delivery. They can do pick up in store.

I think we're very very early in the transformation, but I think it has made a meaningful first start.

For many many retailers.

Speaker 7: Yeah, it's great feedback. And then throughout the year, you've been talking about the uptick in migration too, an adoption of Cloud ERPs, and obviously the channel plays a big role there. Kim, in the past, you've given us the share of business that's been attributed to the channel to not mistaken. Is there any way to give us a sense of where that shook out in 21 or just how it is compared to the last few fiscal years?

Yes, that's great feedback.

And then throughout the year, you've been talking about the uptick in migration to and adoption of cloud ERP and obviously the channel plays a big role there came in the past you've given us the share of business Thats been attributed to the channels are not mistaken is there any way to give us a sense of where that shook out in 'twenty, one or just how it is compared to the last two fiscal years.

Speaker 4: Sure, so Channel Sales remains an important contributor and it's a great lead generation engine to us, particularly to get to some of our larger than average customers. So that remained very strong in 2021, also with the acquisition of Data Masons, which was at the end of 2020. So we've just completed our first full year of having that part of SPS Commerce. That certainly has been a great tailwind for us and we've seen a lot of momentum in the Microsoft space.

Sure. So channel sales remains an important contributor.

And it's a great lead generation engine to us, particularly to get to some of our larger than average customers. So that remained very strong in 2021.

Also with the acquisition of data Maisons, which was at the end of 2020. So we just completed our first full year of <unk>.

Having that part of <unk>.

Sps Commerce and that certainly has been a great tailwind for us and we've seen a lot of momentum in the Microsoft space.

Got it makes sense. Thanks again.

Speaker 1: Thank you on the next question. Councilman Joe Ruin with Fair, you may proceed with your question.

Thank you. Our next question comes from Joe <unk> with Baird. You May proceed with your question.

Speaker 7: Awesome, hi everybody. This is Peter on Pregioto Night. Thanks for taking our questions. Just one for me, I'm the competitive environment. Recently, there's been some public commentaries from some of your film and network peers. I wonder if you're seeing any increased competitive pressures in the segment of the market, or just a byproduct of what just, ultimately, a larger and faster market opportunity.

Awesome Hi, everybody. This is Peter on for Joe Tonight, Thanks for taking our questions.

One for me.

On the competitive environment recently.

Recently, there's been some public commentary from some of your film and network peers I'm wondering if you're seeing any increased competitive pressures in this segment of the market or is it just a byproduct of what.

Ultimately, our larger and faster market opportunity today.

Speaker 6: Yeah, I would tell you that over the last two years, we've seen a further differentiation in the competitive landscape between SPS Commerce and its peers. For a couple reasons, one, this trend towards Omni Channel, where we have the largest network, it's a vast network that includes both Dropship, A Commerce and Brick and Mortar. And then our relationships with a...

Yes, I would tell you that over the last two years, we've seen a further differentiation in the competitive landscape between Sps commerce and its peers.

For a couple of reasons one this trend towards omni channel, where we are the we have the largest network. It's a vast network that includes both drop ship ecommerce and brick and mortar and then our relationships with the with the retailers and so we have not seen.

Speaker 6: And so we have not seen in intensified competition. We think our expertise in particular in the ERP systems is a competitive advantage. And then obviously we are a network service.

Intensified competition, we think our expertise in particular in the ERP systems is a competitive advantage and then obviously we are a network service we truly have built out our network. So some of the announcements we've seen from people that are either software oriented or managed service oriented so.

Speaker 6: You know, we truly have built out a network. So some of the announcements we've seen are from people that are either software oriented or managed service oriented, so they really don't have a network.

They really don't have a network and that will continue we believe into the future be a very strong competitive advantage for Sps commerce.

Speaker 6: And that will continue, we believe, into the future be a very strong, competitive advantage for us, with commerce.

Awesome. Thank you I'll leave it there.

Speaker 1: Thank you on our squarcing goes on Jeff Van Rie with Craig Allen, new air perceiver to your question.

Thank you. Our next question comes from Jeff Van <unk> with Craig Hallum May proceed with your question.

Speaker 8: they came in our two years several of them from out of the straight-up quickly uh... you know i definitely on the sale side of the church of junkness and uh... and tina done a great job seem to have have have hit their stride and how do you think about sales capacity additions as we get into twenty two

Hey, Kim and Archie several for me I'll jump through these fairly quickly.

On the sales side, obviously Dan.

No.

You've done a great job seem to have hit their stride I mean, how do you think about sales capacity additions as we get into 'twenty two.

Speaker 4: Sure, so we will continue to add resources as we see it appropriate based on the opportunity in front of us. To your point of the last few years, there's been a lot of work done to increase that capacity per sales rep. And certainly the longer a person's with us, the more expectations we have for each of those sales reps and therefore their quota, for example, would increase on an annual basis. But we are in a position where we are adding.

Sure. So we will continue to add resources as we see it appropriate based on the opportunity in front of us to your point over the last few years, there's been a lot of work done to increase that capacity per sales rep and certainly the longer a persons with us the more expectations, we have for each of those.

Sales reps and therefore their quota for example wood.

Increase on an annual basis, but we are in a position, where we are adding capacity and adding some resources really more driven by the opportunity that we see in front of us.

Speaker 4: capacity and adding some resources really more driven by the opportunity that we see in front of us.

Speaker 8: Okay. On the carrier service and carrier optimization product, can you just talk about, I knew I realized it's early there, but just where is that? What have you seen in terms of early pipeline, early receptivity seems like a pretty interesting product.

Okay.

On the on the carrier service interior optimization product can you just talk about I realize it's early there, but just where is that what have you seen in terms of early pipeline early receptivity seems like a pretty interesting product.

Speaker 6: Yeah, I would say again, it's very early. We're seeing good reception to that. Obviously, it's value. I think we're also seeing it as a potential, two things, one, a potential competitive advantage, and also a retention tool as well. Once people are fully integrated and used.

I would say again, it's very early we're seeing good reception to that.

Obviously.

Its value.

We're also seeing it as a potential two things one a potential competitive advantage and also a re.

Tension tool as well once people are fully integrated and using it.

Speaker 8: Okay, last for me, just on the pipeline of enablement campaigns, anything else you'd observe in the pipe that's a little out of the normal, whether it's the size of the target customers, the makeup of that pipe verticals, anything else notable in what you're seeing working through?

Okay.

Last from me just on the pipeline.

Of enablement campaigns anything else you'd observe in the pipe that's a little out of the normal whether it's the size of the target customers.

Cup of that pipe verticals anything else notable in what Youre seeing in working through.

Speaker 6: I would just say, you know, an evolution from the last two, three years that we continue to get bigger and bigger deals. I think it's because of our capabilities, our leadership position, and companies willingness to move to cloud ERPs, and so we're following that trend. And then I would say the retail.

I would I would just say an evolution from the last two three years that we continue to get bigger and bigger deals.

I think it's because of our capabilities, our leadership position and company's willingness to move to cloud Erp's and so were following that trend and then I would say the retail.

Speaker 6: The retail pipeline continues to get broader and broader in the retail and industrial distribution and different distribution specialty. As I think that the moves the sales organization made of more specialization within the retail sales group is paying off. Interesting.

The retail pipeline continues to get broader and broader into retail and industrial distribution in different distribution specialty as I think the moves the sales organization made up of.

More specialization within the retail sales group is paying off.

Interesting.

Okay, great Thanks, great quarter.

Thank you.

Speaker 1: Hey, here on Next Question comes from Mark Shuffle with Luke Capital to make perceiving their questions.

Thank you. Our next question comes from Mark Chappell with Loop capital You May proceed with your question.

Speaker 9: Hi, thank you for taking my question and nice job on the quarter. Archie, regarding M&A, you know, historically the company's been making about one acquisition of year, at least over the last few years here. Given your strong balance sheet, is there any appetite to do more than say one deal a year going forward?

Hi, Thank you for taking my question and nice job on the quarter.

Regarding M&A historically, the company has been making about one acquisition a year.

Over the last few years here given your strong balance sheet is there any appetite to do more than say one deal you're going forward.

Speaker 6: Yeah, I think that when we look at the pipeline, et cetera, I think that one year, we never had an appetite to do less than, or only do one a year, I think as we move forward.

Yes, I think that when we look at the pipeline et cetera, I think that one year, we never had an appetite to do less.

Then or.

Only do one a year I think as we move forward.

Speaker 6: You know, won't make a projection for 2022, but going forward as we're looking at more product roadmap and more acquisitions for add-on products for our 37,500 recurring revenue customers to add value to them and be able to monetize that. I would like to believe we could do at least slightly more than that. Again, that's not a 2022 prediction, but as we ramp that pipeline up and that becomes a priority of looking

Won't make a projection for 2022, but going forward as we're looking at more product roadmap in more acquisitions for add on products for our 37500 recurring revenue customers to add value to them and be able to monetize that I would like to believe we could do at least slightly more than.

Again, that's not a 2022 prediction, but as we ramp that pipeline up and that becomes a priority of looking slightly broader.

Speaker 6: slightly broader. Most of these are going to be tuck-in type-acquisitions where we can have our extremely highly qualified

Most of these are going to be tuck in type acquisitions, where we can have our extremely highly qualified.

Speaker 6: sales force sell to the 37,500 trusts.

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Sales force.

Well to the 37500 customers.

Speaker 9: Great thanks and Kim, the recurring revenue customer number was up quite nicely in the quarter. How many of those customers did the Genius Central?

Great. Thanks, and Kim the recurring revenue customer number was up quite nicely in the quarter.

Many of those customers did genius central ad.

Speaker 4: Sure, a genius central added about 1700 in the quarter. So about 400 net ads excluding.

Sure Jamie Central added about 1700 in a quarter. So about 400 net adds excluding.

Okay.

400 net adds okay great.

Speaker 4: I was exuding heal essential. Junior untuk er. With 1700.

I would say consulting team with central tenet central with <unk> hundred.

Okay, great. Thank you.

Speaker 1: Thank you our next question comes from the hot truck to with North and Capitol. You may receive either questions.

Thank you. Our next question comes from the Hangzhou <unk> Northland Capital You May proceed with your question.

Speaker 10: Oh yeah, thank you for taking my question and good quarter. Password quarters have mentioned that your revenue opportunity, long-term revenue opportunity may be much bigger than 5 billion. So I think that Shopify has 600,000 customers versus your target of 200,000 customers.

Yes. Thank you for taking my question and good quarter.

Past few quarters.

Has mentioned that your revenue opportunity long term revenue opportunity may be much bigger than $5 billion.

I think Thats Shopify has 600000 customers versus your target of 200000 customers.

Speaker 10: But Shopify's customers tend to be a lot smaller than that's presumably a smaller ARR opportunity than your current target set. So any advice on how to think about one, SPSC's ability to hit that smaller customer size, in a meaningful way, and then the ARR opportunity, associated with that smaller customer size as well.

But shopify as customers tend to be a lot smaller and that's presumably a smaller opportunity than your current targets.

So any advice on how to think about one Sps <unk> ability to hit that smaller customer size.

In a meaningful way and then the AAR opportunity associated with that smaller customer size as well.

Speaker 6: Yeah, I would say there's two things that we have our eyes on. One is when we have a supplier.

Yes, I would say, there's two things that we have our eyes on one is when we have a supplier.

Speaker 6: We are, they are using us for all of their EDI or API read.

We are they are using us for all of their Adi or API retailers.

Speaker 6: Right? And they do have smaller retailers they're doing business with that are sending...

And they do have smaller retailers, who are doing business with that are sending.

Speaker 6: email or fax or harvester sending their

E mail or fax or however, they are setting there.

Got it.

Speaker 6: their purchase orders to them. As we have more add-on products, we're able to, I believe, for that supplier have a bigger chunk of their business besides just the EDI API retailers. So that's the first part. And then the second part is to continue to add on products to those 37,500 recurring revenue customers and be able to drive value for our customers while at the same time monetizing those customers. So I think those are the two things.

Their purchase orders to them as we have more add on products, we're able to I believe for that supplier have a bigger chunk of their business. Besides just the Adi API retailers. So that's the first that's the first part and then the second part is to continue to add on products to those 37 five.

Recurring revenue customers and be able to drive value for our customers. While at the same time monetizing those customers. So I think those are the two things not necessarily the smallest suppliers, but capturing all of the retailers at a supplier does business with regardless of how that retailer does.

Speaker 6: Not necessarily the smallest suppliers, but capturing all of the retailers that a supplier does business with, regardless of how that retailer does business.

Business.

Speaker 10: Okay, and you know, you have been adding functionality as this, but why doesn't your target ARR or customer go up given that you have been adding functionality?

Okay.

<unk> been adding functionality as is but.

Why does it or target or per customer go up given that you have been adding functionality.

Speaker 4: Sure, so if you look at what we show, which we say the opportunities at least $5 billion, that's really primarily based on the two primary products we have today, which is fulfillment and analytics. That's also why we have said that the total adjustable market is greater than that. For the exact reason of what we're talking about now, when we have additional sort of add-on products, all of that would be considered additive to that $5 billion number.

Sure. So if you look at what we which we show, which we say the opportunities at least $5 billion.

That's really primarily based on the two primary products, we have today, which is fulfillment and analytics. That's also why we have said that the total addressable market is greater than that.

For the exact reason of what we're talking about now when we have additional sort of add on products all of that would be considered additive to that $5 billion number.

Speaker 10: Okay, and any sense as far as like what is actually the true AR or customer target them when you do consider those additional add-on products that you guys have already added?

Okay, and any sense as far as like what is actually the true.

Customer target them when you do consider those additional add on products that you guys have already added.

Speaker 4: Sure, at this point we're saying we think the answer is certainly significantly greater than that 5 billion overall, but we haven't updated the number. The way I like to look at it is 5 billion versus where we are today, as much larger than where we are today, and we know that opportunity is definitely much more than that 5 billion. So there will be a point in the future we may take that opportunity to increase that number.

Sure at this point, we're saying we think the answer is certainly significantly greater than that $5 billion overall, but we haven't updated the number the way I like to look at it is.

$5 billion versus where we are today.

Much larger than where we are today and we know that opportunity is is definitely much more than that $5 billion. So there'll be a point in the future. We may take that opportunity to increase that number.

Speaker 10: Okay, and then finally, you are guiding the 15% to 15% year of year go up for calendar 22. Do you have a small acquisition? Does that 15 to 16% apply on an organic basis, or is that a little bit lower?

Okay, and then finally.

You are guiding to 15% or 16% year over year growth for calendar 'twenty. Two do you have a small acquisition.

Does that 15% to 16% applying on organic basis or is that a little bit lower.

Speaker 4: So what we do as a company in the year we're in, we guide to consolidated. So our expectation for full year, 2022 is reflected in our guidance of 15 to 16%. We did a small tuck in acquisition in November , 2021. At the time we did that acquisition, we said that would translate to roughly $3 million of revenue in 2022. And all of that has been taken into account in that consolidated guidance number. Ended Degrees is a few years

So what we do as a company in the in the year, where and we guide to consolidated so our expectation for full year 2022 as reflected in our guidance of 15% to 16%.

Did a small tuck in acquisition in November 2021 at the time, we did that acquisition, we said that would <unk>.

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Roughly $3 million of revenue in 2022, and all of that has been taken into account in that consolidated guidance number.

Great. Thank you very much.

Speaker 1: Thank you. And as our Minder's asked a question, you'll need to press star one on your telephone. Our next question comes from Joe Goodwin with JMP. You may proceed with your question.

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 Joe Goodwin with JMP. You May proceed with your question.

Oh, great Kim and Archie.

Speaker 8: Just on the how do the international segment perform this quarter and can you just talk about some of the how you're feeling about future growth prospects of the international markets going forward? Yeah, I would say

Just how does the international segment performed this quarter and can you just talk about how.

How youre feeling about the future growth prospects of the international markets going forward.

Yes, I would say there is three three areas. We're focused on one is the.

Speaker 6: Three areas were focused on one is the Australian marketplace, which is a full ecosystem. And they had a very strong 2021, especially as they moved into more retail programs.

Australia and marketplace, which is a full ecosystem and they had they had a very strong 2021, especially as they moved into more retail programs and it was a tougher 2020 for them because they were very segmented and they didn't have as broad a network as we do in the in north.

Speaker 6: And it was a tougher 2020 for them because they were very segmented and they didn't have as broad a network as we do in North America. So they were in areas that got hit harder. So very strong 2021 for Australia. And we feel very optimistic about the team in Australia and the quality of the team there to be able to execute. The second area is more really Asia, which is part of the North America supply chain. And we continue to have.

Erika so they were in areas that got hit harder so very strong 2021 for Australia, and we feel very optimistic about the team in Australia and the quality of the team there to be able to execute the second area is.

More really Asia, which is part of the North America supply chain and we continue to have retailers that have suppliers that are in APAC and want us to help enable them I was actually on a kickoff call. This morning with the retailer and that was one of those specific questions was how are you going to handle all of my suppliers and <unk>.

Speaker 6: retailers that have suppliers that are in APAC and want us to help enable them. That's actually on a kick off call this morning with the retailer and that was one of their specific questions was how are you going to handle all of my suppliers in Asia. So that's really more of an extension of ESCIS commerce. And then the third part is Europe . And we're focusing first and foremost on the analytics opportunity in Europe , helping our larger suppliers bring us to the retailers. We have a product that's...

Asia. So that's really more of an extension of Sps Commerce and then the third part is Europe .

And we're focusing first and foremost on the analytics opportunity in Europe , helping our larger suppliers bring us to the retailers, we have a product thats game.

Speaker 6: Game time ready is fully used and feel very good about that. Again, that took a hiccup at the beginning of the pandemic. We literally opened up our Amsterdam office. I think about the day before we closed it for a period of time, but that's starting to get more momentum as well as we're seeing in analytics. So that's where we see our three areas of focus on international at this time. Fight!

Game time ready is fully used and feel very good about that again that took a hiccup at the begin the pandemic, we literally opened up our Amsterdam office I think about the day before we closed it.

For a period of time, but thats starting to get more momentum as well as we're seeing in analytics. So that's that's where we see our three areas of focus on international at this time.

Understood. Thank you.

Speaker 1: Thank you our next question comes from David Robinson with William Blair and I've received a new question.

Thank you. Our next question comes from David Robinson with William Blair. You May proceed with your question.

Speaker 11: I guess the question I had was more around, I guess, capacity for implementing deals for 2022. And then I was also curious how the implementation capacity tracked in 2021 relative to your ex BitcoinN

I guess the question I had was more around I guess capacity for implementing implementing deals for 2022, and then I was also curious how.

The implementation capacity attract in 2020 , one relative to your expectations.

Speaker 4: Sure, so that is an area that we have been investing in and we've been adding resources. We really started that Adding those resources in Q3 or call it the second half of 2021

Sure. So that is an area that we have been investing in and we've been adding resources, we really started that.

Adding those resources in Q3, our call at the second half of 2021 and that was really in response to really a lot of the acceleration of momentum that we've seen in the fulfillment space.

Speaker 4: And that was really in response to really a lot of the acceleration of momentum that we've seen in this fulfillment space.

Speaker 4: And you see that aligned with the, you know, net customer add.

And you see that aligned with the net customer adds.

Speaker 4: that we added in 2021. So feel really good about the additional hires that we brought on board in the back half of 2021. And then we will have all those resources with us into 2022. So the expectation is we'll continue to add in 2022 just like we continue to add each year, but the large increase in capacity and headcount ads.

That we added in 2021, so we feel really good about the additional hires that we brought onboard in the back half of 2021, and then we will have all of those resources.

US into 2022, so the expectation is we'll continue to add in 2022, just like we continue to add each and every year.

The large increase in capacity and head count adds really occurred in the back half of 2021, and then we get to sort of grow into all of that capacity into 2022.

Speaker 4: really occurred in the back half of 2021 and then we get to sort of grow into all of that capacity into 2020.

Speaker 11: Got it. And then just thinking about those ads relative to, I guess, the different labor dynamics that are going on. I mean, are you experiencing any difficulty hiring or any delays and kind of meeting your goals there?

Got it and then just thinking about those ads relative to I.

I guess the different labor dynamics that are going on I mean.

Are you experiencing any difficulty hiring or any delays in kind of meeting your goals there.

Speaker 6: You know, we have not, I think we have a very strong reputation in the market place as a preferred place to work. I think the other thing is that we have world-class training programs and we have over the years. So we're able to bring in, for a junior people, we're able to bring in people mid-career and later-career. So we have a mix of where we can hire and with the training, we don't need to bring in people with specific...

We have not I think we have a very strong reputation in the marketplace is.

Our preferred place to work I think the other thing is that we have world class training programs and we have over the years. So we're able to bring in for a junior people were able to bring in people.

<unk> mid career and later career. So we have a mix of where we can hire and with the training we don't need to bring in people with specific.

Speaker 6: with specific expertise. So I think that helps us. And then as far as retention, while our turnover is higher from then 2020, which was essentially zero, it is that historically low, it continues to be at historically low marks. As far as retention, it continues to be zero marks.

With specific expertise so.

So I think that that helps us.

And then as far as retention, while our turnover is higher than 2020, which was essentially zero. It is at historically low continues to be at historically low marks.

Got it okay. That's all helpful. So I appreciate taking my questions.

Speaker 1: 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 just kind of...

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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Speaker 1: Hello and thank you for standing by. Welcome to SPS Commerce Q4 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. The ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Hermina Blaschich. Please go ahead.

Hello, and thank you for standing by and welcome to the SPS Commerce Q4, 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 call.

<unk> may be recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today are Mino glass Jade. Please go ahead.

Speaker 2: Thank you, Josh. Good afternoon, everyone, and thank you for joining us on SPS Commerce for the Porter and Pull Year 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.

Thank you Josh and good afternoon, everyone and thank you for joining us on Sps Commerce fourth quarter and full year 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.

Speaker 2: The statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially.

Other customers.

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

Speaker 2: 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 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.

Speaker 2: Please refer to our SEC filing, specifically our Form 10K, as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available at our website, sbscomers.com, and at the secswebscitecc.gov. In addition, we are providing a historical data sheet for easy reference on our investor relations section of our website, sbscomers.com.

<unk> press release for a more detailed description of the risk factors that may affect our results. These documents are available on our website Sps commerce dot com and the SEC's website SEC Gov. In addition, we are providing a historical data sheet for easy reference on our Investor Relations section of our website Sps Commerce Dot com.

Speaker 2: During our call today, we will discuss adjusted IVIDA financial measures and non-gap earnings per share. In our press release and our press at the SAC, each of which is posted on our website, you will find additional disclosures regarding these non- GAAP financial measures, including reconciliation of these measures with comparable GAAP measures . And with that, I would like to turn the call over to Archie. Thanks.

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

Each of which is posted on our website you will find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures and with that I would like to turn the call over to Archie.

Thanks, Sara and welcome everyone.

Speaker 6: 2021 marks another year of strong execution and profitable growth for SPS commerce. As retail dynamics continue to emphasize the need for fulfillment automation and supply chain efficient.

2021 marks another year of strong execution and profitable growth for Sps commerce as retail dynamics continue to emphasize the need for fulfillment automation and supply chain efficiency.

Speaker 6: Since the pandemic began, consumer shopping habits forced retailers and suppliers to embrace a true Omni-channel strategy.

Since the pandemic began consumer shopping habits forced retailers and suppliers to embrace a true omni channel strategy.

Speaker 6: In addition, I'm going to disrupt disruption across the global supply chain was intensified by unanticipated spikes in consumer demand, port delays and labor shortages.

In addition, ongoing disruption disruption across the global supply chain was intense intensified by unanticipated spikes in consumer demand port delays and labor shortages.

Speaker 6: overnight supply chain automation became a priority for the retail industry and sbs commerce was instrumental in connecting thousands of suppliers and retailers to overcome inventory constraints and get products to consumers.

Overnight supply chain automation became a priority for the retail industry and Sps Commerce was instrumental in connecting thousands of suppliers and retailers to overcome inventory constraints and get products to consumers.

Speaker 6: Our add-on solutions such as carrier service and streamline connections to e-commerce platforms and marketplaces are helping our customers execute a true on-the-channel strategy and represent a growth opportunity while expanding our addressable market.

Our add on solutions, such as carrier service and streamline connections that e-commerce platforms, and marketplaces are helping our customers execute a true omnichannel strategy and represent a growth opportunity, while expanding our addressable market.

Speaker 6: The need for supply chain automation continue to fuel demand for EDI.

The need for supply chain automation continued to fuel demand for Adi for.

Speaker 6: For the full year, revenue grew 23% to $385.3 million. Recurring revenue grew 20% year over year, led by fulfillment growth of 22%.

For the full year revenue grew 23% to $385 $3 million.

Recurring revenue grew 20% year over year led by fulfillment growth of 22%.

Speaker 6: We're also seeing acceleration in analytics, which grew 10% in 2021, as retailers are adopting omnichannel fulfillment strategies and leveraging stores for distribution, making point of sale data critical in optimizing product sales and inventory.

We're also seeing acceleration in analytics, which grew 10% in 2021 as retailers are adopting omnichannel fulfillment strategies and leveraging stores for distribution.

Point of sale data critical in optimizing product sales and inventory.

Speaker 6: That new customer adds increased by 40% in 2021, which excludes the recent Genius Central acquisition.

Net new customer adds increased by 40% in 2021, which excludes the recent genius central acquisition.

Speaker 6: Following organic growth of 27% in 2020, as retailers, brands, and suppliers continue to prioritize automation and a consumer-centric fulfillment strategy.

Following organic growth of 27% in 2020 as retailers brands and suppliers continued to prioritize automation and a consumer centric fulfillment strategy.

Speaker 6: StitchFix, a leading e-commerce personal styling service, need to completely overhaul their technology landscape to enable ongoing business expansion.

Stitch fix a leading e-commerce personal styling service need to completely overhaul their technology landscape to enable ongoing business expansion.

Speaker 6: They chose SPS for our ability to onboard vendors and volume, provide full-service support, and offer expertise in vendor and distribution management.

They chose Sps for our ability to onboard vendors and volume provide full service support and offer expertise and vendor and distribution management.

Speaker 6: William Sonoma, a multi-channel specialty retailer of high quality home products, was focused on expanding a chip to consumer distribution channel capability since early 2020, and engaged with SPS to onboard over 500 dropship vendors to EDI.

Williams Sonoma, our multichannel specialty retailer of high quality home products was focused on expanding its shift to consumer distribution channel capabilities since early 2020.

And engaged with Sps to onboard over 500 dropship vendors to Adi.

Speaker 6: Osborne, the world's largest surface treatment and finishing provider, faced several challenges with its FAPEDI system.

Osborn the world's largest surface treatment and finishing provider based several challenges with its SAP PEGI.

Speaker 6: Many SAP EDI solutions require significant ongoing maintenance from IT teams to meet EDI requirements or to ad trading partners.

System.

Many ask PEGI solutions requires significant ongoing maintenance from ITE teams to meet <unk> requirements or to add trading partners.

Speaker 6: Making changes to the SAP system itself can be difficult and cost.

Making changes to the SAP system itself can be difficult and costly.

Speaker 6: Osborne Deployed FBS fulfillment for SAP and was able to avoid hiring staff to support EDI operations.

Osborn deployed Sps fulfillment for S&P and was able to avoid hiring staff to support <unk> operations improve their order fulfillment performance and freed up resources to focus on the company's strategic initiatives.

Speaker 6: Improves their order fulfillment performance and freed up resources to focus on the company's strategic initiatives.

Speaker 6: Shields, one of the largest sporting goods retailers in America and a long-time SPS partner, made EDIA requirement for all their vendors.

Shields, one of the largest sporting goods retailers in America, and a longtime Sps partner made Adi a requirement for all of their vendors.

Speaker 6: They worked with SPS to quickly onboard their suppliers and now send over 95% of their purchase orders via EDI.

They worked with Sps to quickly onboard their suppliers and now stand at over 95% of their purchase orders via Adi.

Speaker 6: The products are stocked on the floor within 48 hours of delivery, instead of weeks, despite a reduction in labor hours.

Their products are stocked on the floor within 48 hours of delivery instead of weeks, despite a reduction in labor hours.

Speaker 6: with approximately 1,700 brands present in stores at any given time. It's been a win-win for both shields and their vendors to automate their trading partnerships.

With approximately 7500 brands present in stores at any given time, it's been a win win for both shield and their vendors to automate their trading partnerships.

Speaker 6: fukies, a gas station and convenience retailer with approximately 40 stores across the US and a growing number of locations needed to increase efficiencies throughout the supply chain by improving visibility in the shipments and inventory.

<unk>, a gas station and convenience retailer with approximately 40 stores across the U S and a growing number of locations needed to increase efficiencies throughout the supply chain by improving visibility into shipments and inventory.

Speaker 6: In conjunction with an ERP update, Fuckie's is aiming to automate order fulfillment across all the vendors and chose SPS for their EDI solutions.

In conjunction with an ERP update Barclays is aiming to automate order fulfillment across all of our vendors and chose Sps further Adi solution.

Speaker 6: Hello, Bello, a family and baby product company embraced evolving retail dynamics and migrated their on-premise solution to a cloud ERP and selected Microsoft Dynamics 365.

Hello, Bello, a family and baby product company embraced evolving retail dynamics and migrated their on premise solution to a cloud ERP and selected Microsoft dynamics 365 <unk>.

Speaker 6: Having signed a one-year exclusive contract with Walmart, they had to ensure their operations could handle the expected volume.

Having signed a one year exclusive contract with Walmart they had to ensure their operations could handle the expected volume.

Speaker 6: Thanks to SPS's vast network and expertise in Microsoft ERP integration, hella bella went from sign-on to go live in a matter of weeks.

Thanks to Sps's vast network and expertise in Microsoft ERP integration Hello, Bello went from sign on to go live in a matter of weeks.

Speaker 6: Lastly, to strengthen our leadership in food retail and distribution, we recently acquired Genius Central, a leader in in-isle ordering for natural and specially food growth.

Lastly to strengthen our leadership in food retail and distribution, we recently acquired genius Central a leader in an aisle ordering for natural and specialty food grocers.

Speaker 6: SBS's competitive differentiation and our ability to expedite trading partner onboarding is rooted in the size of our network, our world-class products and people, and the strategic acquisitions we made over the years to facilitate integration of the SBS solution to our customers ER pieces.

Sps is competitive differentiation and our ability to expedite trading partner Onboarding is rooted in the size of our network, our world class products and people and the strategic acquisitions, we made over the years to facilitate integration of the Sps solution to our customers' ERP system.

Speaker 6: Our investments are accelerating our growth while expanding our addressable market.

Our investments are accelerating our growth, while expanding our addressable market.

Speaker 6: SPS has grown from a groundbreaking disruptive idea into the largest retail cloud service and the industry's first integrated suite of products are protected for today's Omni Channel retail world.

Sps has grown from a groundbreaking disruptive idea into the largest retail cloud service and the industry's first integrated suite of products Architected for today's Omnichannel retail world.

Speaker 6: I would like to thank all of our employees for their steadfast dedication to the company and our customer success.

I would like to thank all of our employees for their steadfast dedication to the company.

And our customer success.

Speaker 4: With that, I'll turn it over to Kim to discuss our financial results. Thanks, Archie. We had a great fourth quarter. Revenue for the quarter was $102.8 million, a 23% increase over Q4 of last year, and represented our 84th consecutive quarter of revenue growth. Recording revenue to the quarter grew 21% year over year. Adjusted EBITDA increased 21% in the quarter to $27.7 million.

With that I'll turn it over to Kim to discuss our financial results. Thanks, Archie we had a great fourth quarter revenue for the quarter was $102 8 million a 23% increase over Q4 of last year and represented our 84th consecutive quarter of revenue growth recurring revenue. This quarter grew 21% year over year adjusted EBITDA.

Increased 21% in the quarter to $27 7 million.

Speaker 4: For the year, revenue was $385.3 million, a 23% increase, and recurring revenue grew 20%. The total number of recurring revenue customers increased 13% year over year to approximately 37,500, and while it share increased 9% to 10,000, 50%.

For the year revenue was $385 $3 million, a 23% increase and recurring revenue grew 20% the.

The total number of recurring revenue customers increased 13% year over year to approximately 37500 and wallet share increased 9% to 10050.

Speaker 4: As a reminder in November 21, we announced the acquisition of Genius Central, which added approximately 1700 customers to our network.

As a reminder, in November 21, we announced the acquisition of genius Central which added approximately 700 customers to our network.

Speaker 4: Adjusted either $1,23% to $107 million. We ended the year with total cash and investments of $257 million and repurchased approximately $20 million of SPS shares.

Adjusted EBITDA grew 23% to $107 million, we ended the year with total cash and investments of $257 million and repurchased approximately $20 million of Sps shares.

Now turning to guidance for the first quarter of 'twenty, two we expect revenue to be in the range of $103 8 million to $104 8 million.

Speaker 4: For the first quarter of 22, we expect revenue to be in the range of $103.8 million to $104.8 million. For the full year, we expect revenue to be in the range of $442.5 million to $445.5 million, representing approximately 15 to 16 percent growth over 2021.

For the full year, we expect revenue to be in the range of $442 5 million to $445 $5 million, representing approximately 15% to 16% growth over 2021.

Speaker 4: For the first quarter of 22, we expected just to EBITDA to be in the range of 28.8 million to 29.3 million dollars. For the full year, we expected just to EBITDA to be in the range of 125 million to 126.5 million dollars, which is higher than the 124 million to 126 million previously communicated on the Q3 2021 earnings conference call and represents 17 to 18 percent growth over 2021.

For the first quarter of 'twenty, two we expect adjusted EBITDA to be in the range of $28 8 million to $29 3 million for the full year, we expect adjusted EBITDA to be in the range of $125 million to $126 $5 million, which is higher than the $124 million to $126 million previously commute.

<unk> on the Q3 2021 earnings conference call.

And represents 17% to 18% growth over 2021.

Speaker 4: For Q1-22, we expect fully diluted earnings per share to be in the range of 24 to 25 cents, with fully diluted weighted average share without standing of approximately 37.3 million shares. We expect non-gap diluted earnings per share to be in the range of 46 to 47 cents, with stock based compensation expense of approximately 9.2 million dollars, depreciation expense of approximately $4 million.

For Q1, 'twenty, two we expect fully diluted earnings per share to be in the range of 24% to 25.

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 46 to 47.

With stock based compensation expense of approximately $9 2 million depreciation.

Depreciation expense of approximately $4 million.

Speaker 4: An amortization expense of approximately $2.5 million.

And amortization expense of approximately $2 $5 million.

Speaker 4: For the full year 2022, we expect fully deluded earnings per share, which has been the range of $1.15 to $1.8.

For the full year 2022, we expect fully diluted earnings per share to be in the range of $1 15 to $1 18, we expect fully diluted weighted average shares outstanding of approximately 37 5 million shares.

Speaker 4: We expect fully to do it a weighted average shares outstanding of approximately 37.5 million shares.

Speaker 4: expect non-gaveluded earnings per share to be in the range of $1.99 to $2.02 cents with stock-based compensation expense of approximately $35 million.

Expect non-GAAP diluted earnings per share to be in the range of $1 99 to $2 <unk>.

With stock based compensation expense of approximately $35 million we.

Speaker 4: We expect appreciation expense of approximately $18.1 million, and we expect amortization expense for the year to be approximately $10 million.

We expect depreciation expense of approximately $18 $1 million and we expect amortization expense for the year to be approximately $10 million.

Speaker 4: For the year you should model approximately 30% effective tax rate calculated on GAP pre-tax net earn.

For the year, you should model approximately 30% effective tax rate calculated on GAAP pretax net earnings.

Speaker 4: Beyond 2022, we maintain our annual revenue growth expectations of 15% or greater, and we continue to expect adjusted EBITDA dollar growth of 15 to 25%, as we invest in the business to capitalize on market dynamics and support current and future growth. In the long term, we maintain our target model for adjusted EBITDA margin of 35%.

Beyond 2022, we maintain our annual revenue growth expectations of 15% or greater and we continue to expect adjusted EBITDA dollar growth of 15% to 25% as we 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 of 30%.

5%.

Speaker 4: In summary, SPS Commerce delivered strong fourth quarter and full year 2020 results, culminating in two firsts, quarterly revenue greater than $100 million, and annual adjusted EBITDA dollars greater than $100 million.

In summary, Sps Commerce delivered strong fourth quarter and full year 2020 results, culminating in two first quarterly revenue greater than $100 million in annual adjusted EBIT dollars greater than $100 million.

Speaker 4: fulfillment automation and the need for supply chain efficiencies continue to drive demand for EDI. And SPS is well positioned to capitalize on evolving retail dynamics with our growing portfolio of solutions and expanding a dressable market. With that, I'd like to open the call to questions.

Fulfillment automation and the need for supply chain efficiencies continue to drive demand for Adi and Sps is well positioned to capitalize on evolving retail dynamics with our growing portfolio of solutions and expanding addressable market with that I'd like to open the call to questions.

Yes.

Speaker 1: Thank you, as a reminder, to ask a question, you'll need to press star one on your telephone to withdraw your question, press the pound.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

Draw your question press the pound key.

Speaker 1: Our first question comes from Scott Berg with Needham. You may proceed with your question.

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

Speaker 3: Hi, I'm Gene Kim, who's at the Good Quarter and the metrics look fantastic. I guess RG, let's start off with a general kind of state of the ecosystem. You all raised your growth rates a couple quarters ago, the annual growth rate over the intermediate term. Obviously Kim's guidance sounds like you still feel very confident in the macro environment. But a question I continue to get when thinking about SPS Commerce is, the business seemed like it had a benefit from the pandemic.

Hi, Archie and Kim Congrats on the good quarter and the metrics looks.

Fantastic.

I guess, let's start off with a general kind of state of the ecosystem. You. All have raised your growth rate a couple of quarters ago. The annual growth rate over the intermediate term, obviously kim's guidance sounds like you still feel very confident in the macro environment, but a question I continue to get when thinking about Sps commerce is the business seemed like it.

The benefit from the pandemic.

Speaker 3: How should we feel about the, I guess, those benefits really being sustainable over the next two or three years? Are there incremental or different drivers that you're seeing that will drive the business, you know, it kind of more forward or extend the momentum?

How should we feel about the I guess those benefits really being sustainable over the next two or three years are there incremental or different drivers that youre seeing that will drive the business.

It kind of more forward or extend the momentum that you're seeing.

Speaker 6: you know when i look back i think there was some there was some benefits in twenty twenty 2021 uh... as the world is truly accelerated to an army channel world we're moving along on e-commerce we're moving along on brick and mortar but it really wasn't an army channel world and i think that is a driver but i think that more importantly what's really driving our acceleration from uh... three four years ago is our investments in our strategic initiatives

Yes, when I look back I think there was some there was some benefits in 2000 22021.

As the world is truly accelerated to an Omnichannel world, We're moving along on E. Commerce, we're moving along on brick and mortar, but it really wasn't an omnichannel world and I think that is a driver, but I think Scott more importantly, what's really driving our acceleration from three or four years ago is our investments in our strategic.

Speaker 6: We start investing in demand generation.

<unk> initiatives.

We start investing in demand generation.

Speaker 6: marketing more aggressively, customer success, we made some investments, especially on the retail side. In 2018, we re-organized the sales organization, which

Marketing more aggressively customer success, we made some investments, especially on the retail side in 2018, we reorganized.

The sales organization, which.

Speaker 6: was probably more painful than I anticipated, but is now getting more gain than I would have anticipated. We rolled out a brand new fulfillment.

It was probably more painful than I anticipated, but is now get it we're getting more gain than I would have anticipated.

We rolled out a brand new fulfillment.

Speaker 6: platform in 2017 with new go-to-market strategy over the next couple years. So I think that actually what's happening more for ASCAS commerce is it's more a culmination of our investments that we've made in 1617, 1819.

Platform in 2017 with new go to market strategy over the next couple of years. So I think that actually what's happening more for Sps Commerce is it's more a combination of our investments that we've made in 16 17, 18, 19 that really start benefiting.

Speaker 6: that really start benefiting us in 2021, 2022 and beyond. So I think some slight positives with the pandemic or acceleration in the Omni Channel world, but I think it's actually more driven by strategic initiatives.

In 2000, 22021, 2022 and beyond so I think some slight positives with the pandemic or acceleration in the Omnichannel world, but I think it's actually more driven by our strategic initiatives.

Speaker 3: Got it helpful. And then from a follow up perspective, Archie, I know you mentioned that analytics grew 10% in the year. 2020 was a poor growth year for that as analytics and it'll fell in the priority stack of your customers. But does 10% feel like the right growth rate for analytics going forward? Now that hopefully that environment's normalized or do you think there might be more puts and takes that might move that needle one way or the other as you look at calendar.

Got it helpful and then from a follow up perspective, Archie I know you mentioned that.

Analytics grew 10% in the year 2020 was a poor growth year for that is.

As analytics that will fill in the priority stack of your customers, but does this 10% feels like the right growth rate for analytics going forward now that hopefully that environment normalized or do you think there might be more puts and takes that might move that needle one way or the other as you look at.

Calendar 2002, thank you.

Speaker 6: You know, I think long-term, I view fulfillment being able to have, or analytics having the capability of growing consistent with fulfillment. I think in the current environment, I think we can...

I think long term I view fulfillment being able to have our analytics, having the capability of growing consistent with fulfillment I think in the current environment I think we can.

Speaker 6: We've hit a mark and I feel somewhat confidence being around the 10% mark plus or minus that were past where we were a year and a half ago. And that real confident of what the timing is to get analytics back to where it was pre-pandemic.

We've hit our Mark and I feel somewhat confidence being of being around the 10% Mark.

Plus or minus that were passed where we were a year and a half ago and not real confident of what the timing is to get analytics back to where it was pre pandemic, but pretty confident long term that it has it has a lot of opportunity.

Speaker 6: but pretty confident long term that it has a lot of opportunity. Great, that's all I have.

Great Thats, all I have I'll jump back in the queue and congrats again.

Great. Thanks, Scott.

Speaker 1: Thank you. Next question comes from Jason Salino. What do you think you would proceed with your question?

Thank you. Our next question comes from Jason <unk> with Keybanc you May proceed with your question.

Speaker 5: Hi, this is actually a dead end on vegetation. I think we're taking our questions. Maybe the first time I had this, probably more broadly.

Hi, just lastly, devlin obligations.

Thanks for taking my questions.

Maybe first one I had a follow more broadly.

Speaker 5: I also seeing some empirical stuff that lag the broader market in terms of recovery. And I expect these industries come back to normal or online back in 20 points.

Also seeing some <unk>.

Wholesale power lag broader market in terms of recovery and are you expecting kind of.

The industry has come back to normal online Bakken and quite lengthy.

Speaker 6: you know we're not seeing as big a differentiation now as we did you know you're in a half a goal or even a year ago there's some companies per se that are are lagging but in general

We're not seeing as big a differentiation now as we did.

A year and a half ago or even a year ago.

Some companies per se that are lagging but in general.

Speaker 6: We're coming back to more of a normal pace.

We're coming back to more of a normal pace I think we're also coming back to a normal.

Speaker 6: I think we're also coming back to a normal, a more normalized growth rate in e-commerce as well.

A more normalized growth rate in e-commerce as well.

Speaker 6: Obviously we did not take a step back in the commerce.

Obviously, we have we did not take a step back can be commerce, but we did not we did not see in 2021, the large gains that we saw in 2020.

Speaker 6: But we did not see in 2021.

Speaker 6: the large gains that we saw in 2020. But e-commerce is...

But e-commerce is.

Speaker 6: It's a little bit hard to judge because each company does a little bit different. Each retailer does a little bit different. If you order something online and pick up from store, some retailers are counting that as store sales. Some are counting it as e-commerce sales. We view it as an omnichannel sale and so we're seeing much more of that.

It's a little bit hard to judge because each company does it a little bit different each retailer does a little bit different if you order something online and pickup in store. Some retailers are counting that as store sales. Some are counting as ecommerce sales we view it as an omnichannel sale and so we're seeing much more of that.

Speaker 5: Great, that's helpful. And then there's just one more graph on the acquisition of Genius Central in like a nice addition. But maybe you just quickly comment on how the go-to-market motion is there and maybe there's any sort of opportunity for SPS like quickly you run for the go-to-market efforts and maybe accelerate the product adoption there.

Great. That's helpful. And then just one more congrats on the acquisition of junior Central seems like a nice addition.

But maybe could you just quickly comment on how we go to market motion is there and maybe if there's any sort of opportunity for Sps quickly ramp up the go to market efforts, maybe accelerates probably the bottom there.

Speaker 6: Yeah, I think there were two parts of the Genius Central acquisition. One was a go-to-market motion, which was just like ours. And that has been fully integrated into our go-to-market and the quality people that we picked up in that acquisition have been integrated into our teams. So that part going fairly well. And then I think as we go forward, this is much more of a retail sales.

Yes, I think there were two parts of the junior Central Central acquisition. One was a go to market motion, which was just just like ours and that has been fully integrated into our go to market.

The quality people that we picked up in that acquisition has been integrated into our teams so that part.

Quite fairly well and then I think as we as we go forward. This is much more of a retail sales.

Speaker 6: retail sales having that in the bag of the retailer and having some specialization and expertise to help the retail reps is really the motion. Again, this was a small tuck-in acquisition and I think it's a very good acquisition, but I'm not expecting this to be a significant part of our revenue over the next coming five years.

Retail sales, having that in the bag of the retailer and having having some specialization and expertise to help there to help the retail reps is really the motion again. This was a small tuck in acquisition and I think it's a very good acquisition, but I'm not expecting.

<unk> this to be a significant part of our.

Revenue over the coming five years.

Got it thanks, Mark Thanks for the color.

Speaker 1: Thank you our next question goes from Parker Lane with Steve Fowell. You may proceed with your question.

Thank you. Our next question comes from Parker Lane with Stifel. You May proceed with your question.

Speaker 7: Yeah, hi, Kevin Archie. Thanks for taking the question. Archie, you talked about this Omnichannel world we're now living in. Can you share maybe a sense of what share of your customer base hasn't fully embraced this Omnichannel vision yet? Some of these newer use cases like dropshipping and in-sort pickup? And potentially how much incremental wallet share could you gain from those customers embracing this Omnichannel world of renalins?

Yes, Hi, Kevin Archie Thanks for taking the question.

Can you talked about this omni channel World. We're now living in can you share maybe a sense of what share of your customer base hasn't fully embraced this omnichannel vision yet some of these newer use cases like drop shipping and in store pickup and potentially how much incremental wallet share could you gain from those customers embracing omnichannel world that we're now.

Speaker 6: you know it's a that's a good question parker and a little bit challenging but i'll take a little bit of a swag as long as everybody consider a bit of a swag the vast majority have let at least embraced it but they're on a long term journey and i think there's two parts of the journey truly getting to have a true army channel full experience

Lynn.

That's a good question Parker and a little bit challenging, but I'll take a little bit of a swag as long as everybody considers it a bit of a swag.

The vast majority have at least embraced it.

They're on a long term journey and I think there's two parts of the journey truly getting to have a true omnichannel.

We'll experience.

Speaker 6: with expanded aisle with drop ship is a long-term journey. And then the second piece that I think retailers are struggling with is they did a really good job of making sure that they could service their customers and the second phase is now how do we do it efficiently in effect.

With expanded aisle with drop ship.

<unk> is a long term journey and then the second piece that I think retailers are struggling with is <unk>.

They did a really good job of making sure that they could service their customers and the second phases now how do we do it efficiently and effectively.

Speaker 6: So I think we're in the very, very early days, but I think for the first time, retailers are...

I think we are in the very very early days, but I think for the first time.

Retailers are using their stores.

Speaker 6: as a competitive advantage against e-commerce as opposed to a negative. They're using the fact that there's a store by your house and they can do same-day delivery. They can do pickup and store. So I think we're very, very early in the transformation, but I think it has made a meaningful first start for many, many retailers.

As a competitive advantage against e-commerce as opposed to a negative they are using the fact that there is a store by your house and they can do same day delivery that can do pick up in store. So I think we're very very early in the transformation, but I think it has made a meaningful.

First start.

For many many retailers.

Speaker 7: Yeah, it's great feedback. And then throughout the year, you've been talking about the uptick and migration too, an adoption of Cloud ERPs, and obviously the channel plays a big role there. Kim, in the past, you've given us the share of business that's been attributed to the channel to not mistaken. Is there any way to give us a sense of where that shook out in 21 or just how it is compared to the last few fiscal years?

Yes, that's great feedback.

And then throughout the year, you've been talking about the uptick in migration to and adoption of cloud ERP and obviously the channel plays a big role there came in the past you've given us the share of business Thats been attributed to the channels I'm not mistaken is there any way to give us a sense of where that shook out in 'twenty, one or just how it is compared to the last two fiscal years.

Speaker 4: Sure, so Channel Sales remains an important contributor and it's a great lead generation engine to us, particularly to get to some of our larger than average customers. So that remained very strong in 2021, also with the acquisition of Data Masons, which was at the end of 2020. So we've just completed our first full year of having that part of SPS Commerce. That certainly has been a great tailwind for us, and we've seen a lot of momentum in the Microsoft space.

Sure. So channel sales remains an important contributor.

And it's a great lead generation engine to us, particularly to get to some of our larger than average customers. So that remained very strong in 2021.

Also with the acquisition of data Maisons, which was at the end of 2020. So we just completed our first full year of <unk>.

Having that part of Sps.

Sps Commerce and that certainly has been a great tailwind for us and we've seen a lot of momentum in the Microsoft space.

Got it makes sense. Thanks again.

Speaker 1: And your next question comes from Joe Ruin with Eric, you may proceed with your question.

Thank you. Our next question comes from Joe <unk> with Baird. You May proceed with your question.

Speaker 7: Awesome, hi everybody. This is Peter on Pregido tonight. Thanks for taking our questions. Just one for me, I'm the competitive environment. Recently, there's been some public commentaries from some of your film and network peers. I wonder if you're seeing any increased competitive pressures in the segment of the market, or as just a byproduct of what just, ultimately, a larger and faster market opportunity.

Awesome Hi, everybody. This is Peter on for Joe Tonight, Thanks for taking our questions.

One for me.

On the competitive environment recently.

Recently, there's been some public commentary from some of your film and network peers I'm wondering if you're seeing any increased competitive pressures in the segment of the market or is it just a byproduct of what just.

Ultimately, our larger and faster market opportunity today.

Speaker 6: Yeah, I would tell you that over the last two years, we've seen a further differentiation in the competitive landscape between Eskis Commerce and its peers. For a couple reasons, one, this trend towards Omni Channel, where we have the largest network, it's a vast network that includes both dropship, e-commerce and brick and mortar. And then our relationships with the, with the,

Yes, I would tell you that over the last two years, we've seen a further differentiation in the competitive landscape between Sps commerce and its peers.

A couple of reasons one this trend towards omni channel, where we are the we have the largest network. It's a vast network that includes both drop ship e-commerce and brick and mortar and then our relationships with the with our retailers.

Speaker 6: And so we have not seen in intensified competition. We think our expertise in particular in the ERP systems is a competitive advantage. And then obviously we are a network service.

And so we have not seen.

Intensified competition, we think our expertise in particular in the ERP systems is a competitive advantage and then obviously we are a network service.

Speaker 6: you know we truly have built out a network. So some of the announcements we've seen are from people that are either software oriented or managed service oriented, so they really don't have a network.

We truly have built out our network. So some of the announcements we've seen from people that are either software oriented or managed service oriented. So they really don't have a network and that will continue we believe into the future be a very strong competitive advantage for Sps commerce.

Speaker 6: And that will continue, we believe, into the future be a very strong, competitive advantage for us, with commerce.

Awesome. Thank you I'll leave it there.

Speaker 1: Thank you for your next question. Go on some Jeff Van Rie with Craig Halle. We're receiving your question.

Thank you. Our next question comes from Jeff Van <unk> with Craig Hallum May proceed with your question.

Speaker 8: Hey Kim and Archie, yes, several from me. I'll jump through these fairly quickly. You know, I definitely on the sales side, I obviously, Dan, Drunkenness and Tina, done a great job, seemed to have hit their stride. I mean, how do you think about sales capacity additions as we get into 22?

Hey, Kim and Archie several for me I'll jump through these fairly quickly.

Really on the sales side, obviously, Dan joining us.

We've done a great job seem to have hit their stride I mean, how do you think about sales capacity additions as we get into 'twenty two.

Speaker 4: Sure, so we will continue to add resources as we see it appropriate based on the opportunity in front of us. To your point of the last few years, there's been a lot of work done to increase that capacity per sales rep. And certainly the longer a person's with us, the more expectations we have for each of those sales reps and therefore their quota, for example, would increase on an annual basis. But we are in a position where we are adding.

Sure. So we will continue to add resources as we see it appropriate based on the opportunity in front of us to your point over the last few years, there's been a lot of work done to increase that capacity per sales rep and certainly the longer a persons with us the more expectations, we have for each of those.

Sales reps and therefore their quota for example would increase on an annual basis, but we are in a position, where we are adding capacity and adding some resources really more driven by the opportunity that we see in front of us.

Speaker 4: capacity and adding some resources really more driven by the opportunity that we see in front of us

Speaker 8: Okay. On the carrier service and carrier optimization product, can you just talk about, I realize it's early there, but just where is that? What have you seen in terms of early pipeline, early receptivity? Seems like a pretty interesting product.

Okay.

On the on the carrier service superior optimization product can you just talk about I realize it's early there, but just where is that what have you seen in terms of early pipeline early receptivity seems like a pretty interesting product.

Speaker 6: Yeah, I would say again, it's very early. We're seeing good reception to that. Obviously, it's value. I think we're also seeing it as a potential. Two things, one, a potential competitive advantage. And also a retention tool as well. Once people are fully integrated and used.

Yes, I would say again, it's very early we're seeing good reception to that.

Obviously that it's value I think we're also seeing it as a potential two things one.

<unk> competitive advantage and also a retention tool as well once people are fully integrated and using it.

Speaker 8: Okay, last for me, just on the pipeline of enablement campaigns, anything else you'd observe in the pipe that's a little out of the normal, whether it's the size of the target customers, the, you know, the makeup of that pipe verticals, anything else notable in what you're seeing working through?

Okay.

Last from me just on the pipeline.

Enablement campaigns anything else you'd observe in the pipe that's a little out of the normal whether it's the size of the target customers. The makeup of that pipe verticals anything else notable in what youre seeing in working through.

Speaker 6: I would just say an evolution from the last two, three years that we continue to get bigger and bigger deals. I think it's because of our capabilities, our leadership position, and companies willingness to move to cloud ERPs, and so we're following that trend. And then I would say the retail.

I would I would just say an evolution from the last two three years that we continue to get bigger and bigger deals.

I think it's because of our capabilities, our leadership position and company's willingness to move to cloud ERP and <unk>.

So we're following that trend and then I would say the retail.

Speaker 6: The retail pipeline continues to get broader and broader in the retail and industrial distribution and different distribution specialty. As I think that the moves the sales organization made of more specialization within the retail sales group is paying off. Interesting.

The retail pipeline continues to get broader and broader into retail and industrial distribution in different distribution specialty as I think the moves of sales organization made.

More specialization within the retail sales group is paying off.

Hmm interesting.

Okay, great Thanks, great quarter.

<unk>.

Speaker 1: Thank you our next question comes from Mark Shuffle with Luke Capil to make a proceed with your question.

Thank you. Our next question comes from Mark Chappell with Loop capital You May proceed with your question.

Speaker 9: Hi, thank you for taking my question and nice job on the quarter. Archie, regarding M&A, you know, historically the company's been making about one acquisition a year, a quick total last few years here. Given your strong balance sheet, is there any appetite to do more than say one deal a year going forward?

Alright. Thank you for taking my question and nice job on the quarter Archie.

Regarding M&A historically, the company has been making about one acquisition a year ago.

Last few years here given your strong balance sheet is there any appetite to do more than say one deal you're going forward.

Speaker 6: Yeah, I think that when we look at the pipeline, et cetera, I think that one year, we never had an appetite to do less than or only do one a year. I think as we move forward,

Yes, I think that when we look at the pipeline et cetera, I think that one year, we never had an appetite to do less and then.

Our only do one a year.

Think as we move forward.

Speaker 6: You know, won't make a projection for 2022, but going forward as we're looking at more product roadmap and more acquisitions for add-on products for our 37,500 recurring revenue customers to add value to them and be able to monetize that. I would like to believe we could do at least slightly more than that. Again, that's not a 2022 prediction, but as we ramp that pipeline up and that becomes a priority of looking.

Won't make a projection for 2022, but going forward as we're looking at more product roadmap in more acquisitions for add on products for our 37500 recurring revenue customers to add value to them and be able to monetize that I would like to believe we could do at least slightly more than.

Again, thats not a 2022 prediction, but as we ramp that pipeline up and that becomes a priority of looking slightly broader.

Speaker 6: slightly broader. Most of these are going to be tuck-in type-back positions where we can have our extremely highly qualified.

Most of these are going to be tuck in type acquisitions, where we can have our extremely highly qualified.

Speaker 6: Sales Force, sell to the 37,500 costs.

Sales force sell.

Of the 37 500 customers.

Speaker 9: Great, thanks. And Kim, the recurring revenue customer number was up quite nicely in the quarter. How many of those customers did the Genius Central?

Great. Thanks, and Kim the recurring revenue customer number was up quite nicely in the quarter, how many of those customers to juniors central ad.

Speaker 4: Sure, a gene essential added about 1700 in the quarter. So about 400 net ads excluding.

Sure Jamie Central added about 1700 in a quarter. So about 400 net adds excluding.

400 net adds okay great.

Speaker 4: Out exclcuding teen central senior central, with thousand een hundred and.

So we didn't see any central tenet central with <unk> hundred.

Okay, great. Thank you.

Speaker 1: Thank you. Our next question comes from the hot trope tube at Northam Capitol. You may receive either question.

Thank you. Our next question comes from the Hangzhou <unk> Northland Capital You May proceed with your question.

Speaker 10: Oh yeah, thank you for taking my question and good quarter. Password quarters have mentioned that your revenue opportunity, long-term revenue opportunity may be much bigger than 5 billion. So I think that Shopify has 600,000 customers versus your target 200,000 customers.

Hi, yes. Thank you for taking my question and good quarter.

Past few quarters.

<unk> mentioned that your revenue opportunity long term revenue opportunity may be much bigger than $5 billion. So I think thats Shopify has 600000 customers versus your target of 200000 customers.

Speaker 10: But Shopify's customers tend to be a lot smaller and that's presumably a smaller ARR opportunity than your current target set. So any advice on how to think about one, SPSC's ability to hit that smaller customer size, in a meaningful way, and then the ARR opportunity, associated with that smaller customer size as well.

But shopify as customers tend to be a lot smaller and that's presumably a smaller opportunity than your current targets.

So any advice on how to think about.

One Sps <unk> ability to hit that smaller customer size.

In a meaningful way and then the <unk>.

Our opportunity associated with that smaller customer size as well.

Speaker 6: Yeah, I would say there's two things that we have our eyes on. One is when we have a supplier.

Yes, I would say there is two two things that we have our eyes on one is when we have a supplier.

Speaker 6: We are, they are using us for all of their EDI or API reads.

We are they are using us for all of their evi or API retailers.

Speaker 6: Right? And they do have smaller retailers they're doing business with that are sending...

And they do have smaller retailers are doing business with that are sending.

Speaker 6: email or facts or however they're sending their

E mail or fax or however, they're setting there.

Speaker 6: other purchasers to them. As we have more add-on products, we're able to, I believe, for that supplier, have a bigger chunk of their business besides just the EDI API retailers. So that's the first part. And then the second part is to continue to add on products to those 37,500 recurring revenue customers and be able to drive value for our customers while at the same time monetizing those customers. So I think those are the two things.

Their purchase orders to them as we have more add on products, we're able to I believe for that supplier.

Have a bigger chunk of their business. Besides just the Adi API retailers. So that's the first that's the first part and then the second part is to continue to add on products to those 37500 recurring revenue customers and be able to drive value for our customers while at the same time monetizing those customers.

So I think those are the two things.

Speaker 6: Not necessarily the smallest suppliers, but capturing all of the retailers that a supplier does business with, regardless of how that retailer does business.

Not necessarily the smallest suppliers, but capturing all of the retailers at a supplier does business with regardless of how that retailer does business.

Speaker 10: Okay, and you know, you have been adding functionality as is, but why doesn't your target ARR Procure customer go up given that you have been adding functionality?

Okay.

<unk> been adding functionality as is but why doesn't in your target IRR per customer go up given that you have been adding functionality.

Speaker 4: Sure, so if you look at what we show, which we say the opportunity is at least $5 billion, that's really primarily based on the two primary products we have today, which is fulfillment and analytics. That's also why we have said that the total adjustable market is greater than that. For the exact reason of what we're talking about now, when we have additional sort of add-on products, all of that would be considered additive to that $5 billion number.

Sure. So if you look at what we which we show, which we say the opportunities at least $5 billion.

That's really primarily based on the two primary products, we have today, which is fulfillment and analytics. That's also why we have said that the total addressable market is greater than that for.

For the exact reason of what we're talking about now when we have additional sort of add on products all of that would be considered additive to that $5 billion number.

Speaker 10: Okay, and any sense as far as like what is actually the true AR Procustomer target them when you do to consider those additional add-on products that you guys have already added.

Okay, and any sense as far as like what is actually the true <unk> per.

Customer target them when you do consider those additional add on products that you guys have already added.

Speaker 4: Sure, at this point we're saying we think the answer is certainly significantly greater than that 5 billion overall, but we haven't updated the number. The way I like to look at it is 5 billion versus where we are today, as much larger than where we are today, and we know that opportunity is definitely much more than that 5 billion. So there will be a point in the future we may take that opportunity to increase that number.

Sure at this point, we're saying we think the answer is certainly significantly greater than that $5 billion overall, but we haven't updated that number the way I like to look at it is five.

$5 billion versus where we are today is much larger than where we are today and we know that opportunity is is definitely much more than that $5 billion. So there'll be a point in the future. We may take that opportunity to increase that number.

Speaker 10: Okay, and then finally, you are guiding the 15% to 15% year of year growth for calendar 22. Do you have a small acquisition? Does that 15 to 16% apply in an organic basis or is that a little bit lower?

Okay, and then finally.

You are guiding to 15% or 16% year over year growth for calendar 'twenty. Two do you have a small acquisition.

Does that 15% to 16% applying on organic basis or is that a little bit lower.

Speaker 4: So what we do as a company in the year we're in, we guide to consolidated. So our expectation for full year, 2022 is reflected in our guidance of 15 to 16%. We did a small tuck in acquisition in November , 2021. At the time we did that acquisition, we said that would translate to roughly $3 million of revenue in 2022. And all of that has been taken into account in that consolidated guidance number. is

So what we do as a company in the in the year, where and we guide to consolidated so our expectation for full year 2022 as reflected in our guidance of 15% to 16%.

Did a small tuck in acquisition in November 2021 at the time, we did that acquisition, we said that would translate to roughly $3 million of revenue in 2022, and all of that has been taken into account in that consolidated guidance number.

Great. Thank you very much.

Speaker 1: Thank you. And as our Minder's asked a question, you'll need to press star one on your telephone. Our next question comes from Joe Google, who JMP, and you may proceed with your question.

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 Joe Goodwin with JMP. You May proceed with your question.

Oh, great Kim and Archie.

Speaker 8: Just, how do the international segment perform this quarter? And can you just talk about some of the, how you're feeling about future growth prospects of the international markets going forward? Yeah, I would say.

Just how does the international segment performed this quarter and can you just talk about some of the how.

How you are feeling about the future growth prospects of the international markets going forward.

Yes, I would say there is three three areas. We're focused on one is.

Speaker 6: Three areas were focused on one is the Australian marketplace, which is a full ecosystem. They had a very strong 2021, especially as they moved into more retail programs.

Australia and marketplace, which is it's a full ecosystem and they had a they had a very strong 2021, especially as they moved into more retail programs and it was a tougher 2020 for them because they were very segmented.

Speaker 6: And it was a tougher 2020 for them because they were very segmented and they didn't have as broad a network as we do in North America. So they were in areas that got hit harder. So very strong 2021 for Australia. And we feel very optimistic about the team in Australia and the quality of the team there to be able to execute. The second area is more really Asia, which is part of the North America supply chain. And we continue to have.

They didn't have as broad a network as we do in the in North America. So they were in areas that got hit harder. So a very strong 2021 for Australia, and we feel very optimistic about the team in Australia and the quality of the team there to be able to execute the second area is.

More really Asia, which is part of the North America supply chain and we continue to have retailers that have suppliers that are in APAC and want us to help enable them I was actually on a kickoff call. This morning with the retailer and that was one of those specific questions was how are you going to handle all of my suppliers and <unk>.

Speaker 6: retailers that have suppliers that are in APAC and want us to help enable them. That's actually on a kickoff call this morning with the retailer and that was one of their specific questions was how are you going to handle all of my suppliers in Asia. So that's really more of an extension of ESCIS commerce and then the third part is Europe and we're focusing first and foremost on the analytics opportunity in Europe helping our larger suppliers bring us to the retailers. We have a product that's...

Asia. So that's really more of an extension of Sps Commerce and then the third part is Europe .

And we're focusing first and foremost on the analytics opportunity in Europe , helping our larger suppliers bring us to the retailers, we have a product thats.

Speaker 6: Game time ready is fully used and feel very good about that. Again, that took a hiccup at the beginning of the pandemic. We literally opened up our Amsterdam office. I think about the day before we closed it for a period of time, but that's starting to get more momentum as well as we're seeing in analytics. So that's where we see our three areas of focus on international at this time.

Game time ready.

Is fully used and feel very good about that again that took a hiccup at the beginning of the pandemic. We literally opened up our Amsterdam office I think about the day before we closed it.

For a period of time, but thats starting to get more momentum as well as we're seeing in analytics. So that's that's where we see our three areas of focus on international at this time.

Understood. Thank you.

Speaker 1: Thank you our next question comes from David Robinson with William Blair. May I proceed with your question?

Thank you. Our next question comes from David Robinson with William Blair. You May proceed with your question.

Speaker 11: I guess the question I had was more around, I guess, capacity for implementing deals for 2022. And then I was also curious how the implementation capacity tracked in 2021 relative to your expectations.

Hi, guys.

I had was more.

More around I guess capacity for implement implementing deals for 2022, and then I was also curious how.

The implementation capacity attract in 2020 , one relative to your expectations.

Speaker 4: Sure, so that is an area that we have been investing in and we've been adding resources. We really started that adding those resources in Q3 are called the second half of 2021.

Sure. So that is an area that we have been investing in and we've been adding resources, we really started that.

Adding those resources in Q3, our call at the second half of 2021 and that was really in response to really a lot of the acceleration of momentum that we've seen in the fulfillment space and you'll see that aligned with the net customer adds.

Speaker 4: And that was really in response to really a lot of the acceleration of momentum that we've seen in the fulfillment space.

Speaker 4: And you see that aligned with the, you know, net customer ads.

Speaker 4: that we added in 2021. So it's really good about the additional hires that we brought on board in the back half of 2021. And then we will have all those resources with us into 2022. So the expectation is we'll continue to add in 2022 just like we continue to add each and every year, but the large increase in capacity and headcount adds

That we added in 2021, so I feel really good about the additional hires that we brought onboard in the back half of 2021, and then we will have all of those resources.

US into 2022, so the expectation is we'll continue to add in 2022, just like we continue to add each and every year.

The large increase in capacity and head count adds really occurred in the back half of 2021, and then we get to sort of grow into all of that capacity into 2022.

Speaker 4: really occurred in the back half of 2021 and then we get to sort of grow into all of that capacity into 2020.

Speaker 11: Got it. And then just thinking about those ads relative to, I guess, the different labor dynamics that are going on. I mean, are you experiencing any difficulty hiring or any delays and kind of meeting your goals there?

Got it and then just thinking about those ads relative to I.

I guess the different labor dynamics that are going on I mean.

Are you experiencing any difficulty hiring or any delays in kind of meeting your goals there.

Speaker 6: You know, we have not, I think we have a very strong reputation in the market place as a preferred place to work. I think the other thing is that we have world-class training programs and we have over the years. So we're able to bring in, for a junior people, we're able to bring in people mid-career and later-career. So we have a mix of where we can hire and with the training, we don't need to bring in people with specific,

We have not I think we have a very strong reputation in the marketplace is.

A preferred place to work I think the other thing is that we have world class training programs and we have over the years. So we're able to bring in for a junior people were able to bring in people.

<unk> mid career and later career. So we have a mix of where we can hire and with the training we don't need to bring in people with specific.

Speaker 6: with specific expertise. So I think that helps us. And then as far as retention, while our turnover is higher from then 2020, which was essentially zero, it is at historically low, it continues to be at historically low marks.

With specific expertise.

So I think that that helps us.

And then as far as retention, while our turnover is higher than 2020, which was essentially zero. It is at historically low continues to be at historically low marks.

Got it okay. That's all helpful. I appreciate taking my questions.

Speaker 1: 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 just continue.

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.