Q2 2024 SPS Commerce Inc Earnings Call

Good day and welcome to the SPS Commerce Second Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Operator: All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone.

Irmina Blaszczyk: To ask a question, you may press star then 1 on your touch-tone phone. And to withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Ms. Irmina Blaszczyk, Investor Relations for SPS Commerce. Please go ahead, ma'am.

Operator: And to withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Irmina Blaszczyk, Investor Relations for SPS Commerce. Please go ahead, ma'am.

Irmina Blaszczyk: Thank you, Chuck. Good afternoon, everyone, and thank you for joining us on the SPS Commerce second quarter 2024 conference call. We will make certain statements today, including with respect to our financial results, go-to-market strategy, and efforts designed to increase our traction and penetration with retailers and other customers. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially.

Irmina Blaszczyk: Thank you, Chuck. Good afternoon, everyone, and thank you for joining us on the SPS Commerce second quarter 2024 conference call.

Speaker Change: We will make certain statements today, including with respect to our financial results, go-to-market strategy and efforts designed to increase our traction and penetration with retailers and other customers.

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

Irmina Blaszczyk: Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to our SEC filings, specifically our Form 10-K, as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available on our website, spscommerce.com, and on the SEC's website, sec.gov.

Speaker Change: 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 Change: Please refer to our SEC filings, specifically our Form 10-K , as well as our financial results press release for more detailed descriptions of the risk factors that may affect our results.

Speaker Change: 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 the investor relations section of our website, spscommerce.com.

Irmina Blaszczyk: In addition, we are providing a historical data sheet for easy reference in the investor relations section of our website, spscommerce.com. During our call today, we will discuss adjusted EBITDA financial measures and the down gap in company share. In our press release and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-gap financial measures, including reconciliations of these measures with comparable gap measures. And with that, I will turn the call over to Chad. Thanks, Irmina, and good afternoon, everyone.

Speaker Change: During our call today, we will discuss adjusted EBITDA financial measures and down-gap income per share in a press release in our filings with the SEC, each of which is posted on our website.

Speaker Change: You will find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures.

Chad Collins: Thank you for joining us today. We delivered a strong second quarter. Revenue grew 18% to $153.6 million. Recurring revenue also grew 18%. SPS delivers mission-critical, leading supply chain solutions to an industry that continues to evolve, and we remain committed to helping our growing network of retailers and suppliers improve efficiencies across the retail ecosystem. In May, we completed the acquisition of Traverse Systems and expanded our product portfolio in supply chain performance and optimization, enabling retailers to effectively manage vendor performance, improve collaboration, and meet consumer demand. We're excited to welcome our new employees and customers to SPS. Today, 21% of retail sales are completed online.

Speaker Change: And with that, I will turn the call over to Chad.

Chad: Thanks, Irmina, and good afternoon everyone. Thank you for joining us today. We delivered a strong second quarter. Revenue grew 18 percent to $153.6 million. Recurring revenue also grew 18 percent.

Chad: SPS delivers mission-critical, leading supply chain solutions to an industry that continues to evolve, and we remain committed to helping our growing network of retailers and suppliers improve efficiencies across the retail ecosystem.

Chad: In May, we completed the acquisition of Traverse Systems and expanded our product portfolio in supply chain performance and optimization.

Chad: enabling retailers to effectively manage vendor performance, improve collaboration, and meet consumer demand. We're excited to welcome our new employees and customers to SPS Commerce.

Chad Collins: By 2026, it's expected that number will increase to 25%. This translates into an ongoing need for automation to execute a successful omni-channel retail strategy that aims to deliver a consistent consumer experience across multiple sales channels and aligns with their purchase and delivery preferences. For some suppliers, that level of operational efficiency can only be achieved through elevated supply chain visibility.

Speaker Change: Today 21% of retail sales are completed online. By 2026, it's expected that number will increase to 25%.

Chad: This translates to an ongoing need for automation to execute a successful omni-channel retail strategy which aims to deliver consistent consumer experience across multiple sales channels and aligns with their purchase and delivery preferences.

Chad: For some suppliers, that level of operational efficiency can only be achieved through elevated supply chain visibility.

Chad Collins: For example, Mattress Firm, the nation's largest omni-channel mattress specialty retailer, strives to provide the product their customers want on the day and time they choose using their preferred delivery method. To enhance supply chain efficiency, Mattress Firm upgraded their ERP solution and began improving their warehouse management. With supplier collaboration playing a pivotal role in their transformation, Mattress Firm partnered with SPS, relying on the company's ERP integration expertise, supply chain best practices, and established vendor relationships for quick connections to the SPS platform.

Chad: For example, Mattress Firm, the nation's largest omni-channel mattress specialty retailer.

Mattress Firm: strives to provide the product their customers want on the day and time they choose using their preferred delivery method.

Mattress Firm: To enhance supply chain efficiency, Mattress Firm upgraded their ERP solution and began improving their warehouse management system.

Speaker Change: With supplier collaboration playing a pivotal role in their transformation, Mattress Firm partnered with SPS, relying on the company's ERP integration expertise, supply chain best practices, and established vendor relationships for quick connections to the SPS platform.

Chad Collins: Since mattress firms started working with SPS, their customer satisfaction metrics have improved, leading to increased market share. Mattress Firm now operates at a level of excellence that would not be possible without the enhanced inventory and order visibility enabled by SPS Commerce. As suppliers expand their retail network, manual processes can quickly hinder growth opportunities.

Speaker Change: Since mattress firms started working with SPS, their customer satisfaction metrics have improved, leading to increased market share.

Speaker Change: Mattress Firm now operates at a level of excellence that would not be possible without the enhanced inventory and order visibility enabled by SPS Commerce.

Speaker Change: As suppliers expand their retail network, manual processes can quickly hinder growth opportunities.

Chad Collins: The Good Crisp Company in Australia leveraged SPS system automation to integrate fulfillment with an inventory management system to process orders from tens of retailers in half the time. The improvement in efficiency allowed the company to handle increasing order volumes and maintain timely delivery; partnering with SPS equipped The Good Crisp Company to meet the demands of its expanding customer base and navigate the challenges of growing retail partnerships. Collaboration with suppliers is as critical to retailers as it is to distributors. For example, Performance Food Group is an industry leader and one of the largest food and food service distribution companies in North America and works with thousands of suppliers to serve more than 300,000 customer locations.

Speaker Change: The Good Crisp Company in Australia leveraged SPS system automation to integrate fulfillment with an inventory management system to process orders from tens of retailers in half the time.

Speaker Change: The improvement in efficiency allowed the company to handle increasing order volumes and maintain timely delivery.

Speaker Change: Partnering with SPS equipped the Good Crisp Company to meet the demands of its expanding customer base and navigate the challenges of growing retail partnerships.

Speaker Change: Collaboration with suppliers is as critical to retailers as it is to distributors.

Speaker Change: For example, Performance Food Group is an industry leader and one of the largest food and food service distribution companies in North America, and works with thousands of suppliers to serve more than 300,000 customer locations.

Chad Collins: PFG partnered with SPS Commerce to execute an enterprise-wide EDI initiative across their multiple operating segments. For large organizations such as PFG that operate a diversified business model across a broad geographic region, standardized fulfillment processes are critical to ensure timely delivery of goods. Fast and Accurate Invoicing and Visibility into Inventory Movement. Standardization also enables the company to capture critical business information and allows them to quickly respond to changes to maximize long-term success and business efficiency.

Speaker Change: PFG partnered with SPS Commerce to execute an enterprise-wide EDI initiative across their multiple operating segments.

Speaker Change: for large organizations such as PFG that operate a diversified business model across a broad geographic reach.

Speaker Change: Standardized fulfillment processes are critical to ensure timely delivery of goods, fast and accurate invoicing, and visibility into inventory movement.

Speaker Change: Standardization also enables the company to capture critical business information and allows them to quickly respond to changes to maximize long-term success and business efficiency.

Chad Collins: As the retail industry continues to evolve, SPS is uniquely positioned to help suppliers, large and small, digitize their trading partner connections to achieve efficiencies and scalability. The mission-critical nature of our solutions fuels consistent demand for our product portfolio, and we remain confident in the growth opportunity ahead of us as e-commerce and omni-channel retail continue to grow. And with that, I'll turn it over to Kim to discuss our financials. Thanks

Speaker Change: As the retail industry continues to evolve, SPS is uniquely positioned to help suppliers, large and small, digitize their trading partner connections to achieve efficiencies and scalability.

Speaker Change: The mission-critical nature of our solutions fuels consistent demand for our product portfolio, and we remain confident in the growth opportunity ahead of us as e-commerce and omni-channel retail continue to grow.

Kimberly K. Nelson: We had a great second quarter of 2024. Revenue was $153.6 million, an 18% increase over Q2 of last year. Recurring revenue also grew 18% year-over-year. The total number of recurring revenue customers increased 5% year-over-year to approximately 44,950, and its share increased 13% to approximately 12,800. For the quarter, Adjusted EBITDA grew 16% to $44.2 million, compared to $38.2 million in Q2 of last year. We ended the quarter with total cash and investments of $272 million and repurchased approximately $17.5 million of SPS revenue.

Speaker Change: And with that, I'll turn it over to Kim to discuss our financial results. Thanks, Chad. We had a great second quarter of 2024. Revenue was $153.6 million, an 18% increase over Q2 of last year. Recurring revenue also grew 18% year-over-year.

Kim: The total number of recurring revenue customers increased 5% year-over-year to approximately 44,950 and while its share increased 13% to approximately 12,850.

Speaker Change: For the quarter, Adjusted EBITDA grew 16% to $44.2 million, compared to $38.2 million in Q2 of last year.

Speaker Change: We ended the quarter with total cash and investments of $272 million and repurchased approximately 17.5 million of SPS shares.

Kimberly K. Nelson: In addition, the Board of Directors has authorized a new program to repurchase up to $100 million of common stock, which becomes effective on August 23, 2024, and is expected to expire on July 24, 2026. The company's August 2022 program, which previously authorized repurchases of up to $50 million, terminates on July 26.

Speaker Change: In addition, the Board of Directors has authorized a new program to repurchase up to $100 million of common stock, which becomes effective on August 23, 2024, and is expected to expire on July 24, 2026.

Speaker Change: The company's August 2022 program that previously authorized repurchases of up to $50 million terminates on July 26.

Kimberly K. Nelson: Now turning to guidance. For the third quarter of 2024, we expect revenue to be in the range of $157.6 million to $158.6 million, which represents approximately 16 to 17% year-over-year growth. We expect adjusted EBITDA to be in the range of $46.9 million to $47.7 million. We expect fully diluted earnings per share to be in the range of 52 to 53 cents with fully diluted weighted average shares outstanding of approximately $37.9 million.

Speaker Change: Now, turning to guidance.

Speaker Change: For the third quarter of 2024, we expect revenue to be in the range of $157.6 million to $158.6 million, which represents approximately 16 to 17 percent year-over-year growth.

Speaker Change: We expect adjusted EBITDA to be in the range of $46.9 million to $47.7 million.

Speaker Change: We expect fully diluted earnings per share to be in the range of 52 to 53 cents with fully diluted weighted average shares outstanding of approximately 37.9 million shares.

Kimberly K. Nelson: We expect non-GAAP diluted income per share to be in the range of 83 to 84 cents, with stock-based compensation expense of approximately $11.6 million, appreciation expense of approximately $4.7 million, and amortization expense of approximately $5 million. For the full year 2024, we expect revenue to be in the range of $624.2 million to $626 million, representing approximately 16 to 17 percent growth over 2022. We expect the Justice of Ibiza to be in the range of $185.5 million to $187 million, representing growth of approximately 18 to 19 percent over 2022.

Speaker Change: We expect non-GAAP diluted income per share to be in the range of 83 to 84 cents with stock-based compensation expense of approximately $11.6 million, depreciation expense of approximately $4.7 million, and amortization expense of approximately $5 million.

Speaker Change: For the full year 2024, we expect revenue to be in the range of $624.2 million to $626 million, representing approximately 16 to 17 percent growth over 2023.

Speaker Change: We expect Adjusted EBITDA to be in the range of $185.5 million to $187 million, representing growth of approximately 18% to 19% over 2023.

Kimberly K. Nelson: We expect fully diluted earnings per share to be in the range of $2.03 to $2.05, with fully diluted weighted average shares outstanding of approximately $37.8 million. We expect non-GAAP diluted income per share to be in the range of $3.63 to $3.66, with stock-based compensation expense of approximately $55.6 million, depreciation expense of approximately $19.2 million, and amortization expense for the year of approximately $19. For the remainder of the year, on a quarterly basis, investors should model approximately a 30% effective tax rate calculated on GAAP pre-tax net earnings.

Speaker Change: We expect fully diluted earnings per share to be in the range of $2.03 to $2.05, with fully diluted weighted average shares outstanding of approximately 37.8 million shares.

Speaker Change: We expect non-GAAP diluted income per share to be in the range of $3.63 to $3.66, with stock-based compensation expense of approximately $55.6 million, depreciation expense of approximately $19.2 million, and amortization expense for the year of approximately $19.2 million.

Speaker Change: For the remainder of the year, on a quarterly basis, investors should model approximately a 30% effective tax rate calculated on GAAP pre-tax net earnings.

Kimberly K. Nelson: Beyond 2024, we maintain our annual revenue growth expectation of 15% or greater as we expand our network through community enablement campaigns and acquisitions. We continue to expect adjusted EBITDA dollar growth of 15-25% as we invest in the business to support current and future growth. In the long term, we maintain our target model for adjusted EBITDA margin of 35.

Speaker Change: Beyond 2024, we maintain our annual revenue growth expectation of 15% or greater as we expand our network through community enablement campaigns and acquisitions.

Speaker Change: We continue to expect adjusted EBITDA dollar growth of 15 to 25 percent as we invest in the business to support current and future growth.

Speaker Change: In the long term, we maintain our target model for adjusted EBITDA margin of 35%.

Operator: In summary, SPS delivered a strong second quarter performance and the 94th consecutive quarter of revenue growth. Retail Dynamics continues to play a key role in the expansion of our addressable markets, and we believe our balanced growth approach is the right strategy to consistently deliver on our near-term and long-term financial targets. With that, I'd like to open the call to questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up the handset before pressing the keys.

Speaker Change: In summary, SPS delivered a strong second quarter performance and the 94th consecutive quarter revenue growth.

Speaker Change: Retail Dynamics continue to play a key role in the expansion of our addressable markets, and we believe our balanced growth approach is the right strategy to consistently deliver on our near-term and long-term financial targets. With that, I'd like to open the call to questions.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster.

Operator: If at any time your question has been addressed, and you would like to withdraw your question, please press star, then two. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Scott Berg with Needham. Please go ahead.

Speaker Change: And the first question will come from Scott Berg with Needham. Please go ahead.

Scott Randolph Berg: Hi Chad and Kim, nice quarter here and thanks for taking my questions. Chad, I wanted to touch on your acquisition in the quarter, Traverse Systems, which is product sales to a slightly different customer than how you monetize the rest of the platform.

Scott Randolph Berg: Chad, I wanted to touch on your acquisition in the quarter, Traverse Systems.

Speaker Change: The product sells to a slightly different customer than how you monetize the rest of the platform. You're selling this to retailers, trying to monetize some of them. How do we think about what your go-to-market kind of initiatives and investments look like to try to sell into those retailers, knowing that the monetization efforts of most of the companies are still really focused on the suppliers in your ecosystem?

Chad Collins: You're selling this to retailers, trying to monetize some of them. How do we think about what your go-to-market kind of initiatives and investments look like to try to sell into those retailers, knowing that the monetization efforts of most of the companies are still really focused on the suppliers and your customers? Yeah, yeah, good question.

Chad Collins: Thanks, Scott. You know, just as a reminder, we completed that acquisition in May. Things are, although early, performing to our expectations, including us now getting into the post-merger integration project, as well as us getting out and meeting with a number of retailers, some of which are Traverse Systems customers. We've also introduced this concept of vendor compliance management to some of the retail customers that we have a long history of running community programs for.

Speaker Change: Yeah, yeah, good question. Thanks, Scott. You know, just as a reminder, we completed that acquisition in May. Things are, although early, performing to our expectations, including us now getting in the post-merger integration project, as well as us getting to out and meeting with a number of retailers, some of which are Traverse Systems customers. We've also introduced this concept of vendor compliance management to some of the retail customers that we have a long history of running community programs for, and I'd say it's validating our belief that there's strong demand in the market over time for this type of solution as retailers look to optimize the supply chain performance of their vendors.

Chad Collins: And I'd say it's validating our belief that there will be strong demand in the market over time for this type of solution, as retailers look to optimize the supply chain performance of their vendors. And specific with the go-to-market, the way that we're thinking about that is that we've always had a strong go-to-market to the retailers. Retailers and distributors, because they're the means for us to initiate the community programs, which give us access to the suppliers that we monetize.

Speaker Change: And specific with the go-to-market, the way that we're thinking about that is we've always had a strong go-to-market to the retailers, retailers and distributors, because they're the method for us to initiate the community programs, which give us access to the suppliers that we monetize.

Chad Collins: So those marketing activities, and sales activities, are very complementary to what we have been doing for years with community. And now we have an opportunity to really solve additional problems for those retailers with a little bit wider product portfolio and the opportunity to monetize them in line with the value that they get from that Traverse platform. So I don't think it's really about a whole new motion, just expanding the offering a bit to solve more problems within a motion we've already had.

Speaker Change: So, those marketing activities, sales motions are very complementary to what we have been doing for years with community. And now we have an opportunity really to solve additional problems for those retailers with a little bit wider product portfolio and the opportunity to monetize them in line with the value that they get from that Traverse platform. So, I don't think it's really about a whole new motion, just expanding the offering a bit to solve more problems within a motion we've already had.

Kimberly K. Nelson: And then my second question is on customer additions in the quarter. It bounced back. And we're positive obviously in this quarter versus flat last quarter. We continue to get lots of questions from investors on, you know, what this trajectory kind of looks like if we think about the quarter. I know Kim you mentioned that the large program you were working on at a retailer in Q1 that drove the flat additions Bled into the second quarter that were largely complete and would we think about, you know, quarterly customer acquisitions?

Speaker Change: Understood. Helpful. And then my second question is on customer additions in the quarter. It bounced back.

Speaker Change: And we're positive, obviously, in this quarter versus last quarter. We continue to get lots of questions from investors on, you know, what this trajectory kind of looks like.

Speaker Change: If we think about the quarter, I know, Kim, you had mentioned that the large program you were working for in a retailer in Q1 that drove the flat additions bled into the second quarter. Is that largely complete, and should we think about quarterly customer acquisitions to kind of mimic seasonal trends as we look at the back half of the year?

Kimberly K. Nelson: To kind of mimic seasonal trends as we look at the back half of the year. Sure, Scott. So your recollection is correct. The large enablement campaign program that was run in Q1, there was some that led into Q2. The majority of that in Q1, of course, but yes, there was some that was in Q2.

Unknown Attendee: So your recollection is correct. The large enablement campaign program that was running Q1, there was some that led into Q2; the majority of that in Q1, of course, but yes, there was some that it was in Q2.

Kim: Sure, Scott. So your recollection is correct. The large enablement campaign program that was run in Q1, there was some that bled into Q2. Majority of that in Q1, of course, but yes, there was some that was in Q2. That program is now complete, so that's really reflected in the financial results really for the first half of the year.

Kimberly K. Nelson: That program is now complete, so that's really reflected in the financial results for the first half of the year. However, we also have taken the opportunity and looked at our community enablement campaigns, what's in our pipeline for the second half of this year, and we've been able to look at that at a little bit more granular level to say, what do we think that's going to translate to? Overall, we still have those same community enablement campaigns as we were anticipating; a really nice, strong pipeline there.

Kimberly Nelson: That program is now complete, so that's really reflected in the financial results really for the first half of the year. However, we also had taken the opportunity and looked at our community enablement campaigns, what's in our pipeline for the second half of this year, and we've been able to look at that at a little bit more granular level to say what do we think that's going to translate to. Overall, we still have the same community enablement campaigns as we were anticipating. Really nice strong pipeline there. However, our belief is that for the latter part of this year, more of that revenues through those future campaigns are going to show up in wallet share.

Kim: However, we also have taken the opportunity and looked at our community enablement.

Kim: campaigns what's in our pipeline for the second half of this year and we've been able to look at that at a little bit more granular level to say what do we think that's going to translate to.

Kimberly K. Nelson: However, our belief is that for the latter part of this year, more of that revenue through those future campaigns is going to show up in wallet share, so you can interpret that as more of our existing customers adding additional connections through what we see in the pipeline for the remainder of this year. Now, that comment is specific to this year. Longer term, our belief of continuing to grow at 15% with a healthy mix coming from new customers, which we get primarily through community campaigns, as well as a healthy mix of getting more wallet share.

Kim: Overall, we still have those same community enablement campaigns as we were anticipating. Really nice, strong pipeline there. However, our belief is that for the latter part of this year, more of that revenue through those future campaigns are going to show up in wallet share. So you can interpret that as more of our existing customers.

Kimberly Nelson: So you can interpret that as more of our existing customers adding additional connections through what we see in the pipeline for the remainder of this year.

Kim: adding additional connections through what we see in the pipeline for the remainder of this year.

Kimberly Nelson: Now that time in a specific to this year, longer term our belief of continuing to grow at 15%, with a healthy mix coming from new customers, which we get primarily through community campaigns, as well as a healthy mix of getting more wallet share, we believe that mix remains in the future, but for the rest of this year. We do believe that more will come in the form of wallet share.

Kim: Now, that comment is specific to this year. Longer term, our belief of continuing to grow at 15 percent with a healthy mix coming from new customers, which we get primarily through community campaigns, as well as a healthy mix of getting more wallet share. We believe that mix remains in the future, but for the rest of this year, it's a long

Kimberly K. Nelson: We believe that mix remains in the future, but for the rest of this year, we do believe that more will come in the form of wallets. Super helpful, Kim. I guess just one brief follow-up on that is, I guess what's kind of driving that this year in this macro, then, whether it was Q1, and I know it was related to one specific retailer, it sounds like that's at least a little bit of a continuing theme here for the balance of this year, which is different than what we've seen in the past. Is there something driving that in particular, or just, I don't know Yeah, I don't think it's really related to the macro factor.

Kim: We do believe that more will come in the form of wallet share.

Unknown Attendee: So super helpful, Kim. I guess just one brief follow-up on that is, I guess what's kind of driving that this year in this macro that is, is whether it was Q1 and it was related to one specific retailer. It sounds like that's a, at least a little bit of a continuing theme here for the balance of this year, which is different than what we've seen in the past.

Speaker Change: So, super helpful, Kim. I guess just one brief follow-up on that is, I guess what's kind of driving that this year in this macro, then, is, you know, whether it was Q1, and I know it was related to one specific retailer, it sounds like that's at least a little bit of a continuing theme here for the balance of this year, which is different than what we've seen in the past, is there's something driving that in particular, or just

Unknown Attendee: There's something driving that in particular; I don't know, random walk in terms of what your pipelines look like.

Speaker Change: I don't know, a random look in terms of what your pipelines look like.

Kimberly Nelson: Yeah, I don't think it's really related to the macro factor; it really is related to the mix of the type of programs that we have. I think we did explain the type one of those types of programs in Q1 and quite a bit of detail. And as we look out, what we're finding is this programs that are our large community programs that are either adding a new supply chain document, like similar to what happening Q1, or areas where we're expanding within certain divisions of companies or certain industry segments.

Dylan Tyler Becker: It really is related to the mix of the types of programs that we have. I think we did explain one of those types of programs in quite a bit of detail in Q1. And as we look out, what we're finding are programs that are large community programs that are either adding a new supply chain document, similar to what happened in Q1, or areas where we're expanding within certain divisions of companies or certain industry segments where we're fairly penetrated already in those particular supplier bases, but continuing to expand for new divisions of companies or within certain industries. So it's really about just the mix and not something related to external macro factors, Super helpful. Thank you again.

Kim: Yeah, I don't think it's really related to the macro factor. It really is related to the mix of the type of programs that we have. I think we did explain the type one of those types of programs in Q1 in quite a bit of detail and as we look out what we're finding is programs

Kim: that are large community programs that are either adding a new supply chain document like similar to what happened in Q1, or areas where we're expanding within certain divisions of companies or certain industry segments.

Kimberly Nelson: Where we're fairly penetrated already in those particular supplier bases and but continuing to expand for new divisions of companies or within certain industries. So it's really about just the mix and not something related to external macro factors. Is our belief just the mix.

Kim: where we're fairly penetrated already in those particular supplier bases and but continuing to expand for new divisions of companies or within certain industries.

Kim: So it's really about just the mix and not something related to external macro factors is our belief, just the mix.

Dylan Becker: The next question will come from Dylan Becker with William Blair. Please go ahead. Hey guys, appreciate the questions here. Maybe chat for you. There is a, we've talked in the past about what an ERP refresh cycle can look like. There is a large vendor out there going to force that from some of their customers. I wonder what opportunity that might create, given that kind of creates a point of data emphasis and increase visibility for you guys if there is any at all. Yeah, absolutely doing so. In general, yes, ERP change outs are a good opportunity for prospective customers to look at moving their training partner connections to a new format.

Chad Collins: The next question will come from Dylan Becker with William Blair. Please go ahead. Hey guys. I appreciate the questions here. Maybe, Chad, for you, there is a... we've talked in the past about what ERP refresh cycles can look like. There is a large vendor out there kind of forcing that from some of their customers. I wonder what opportunity that might create, given that it kind of creates a point of data emphasis and increased visibility for you guys, if there is any at all.

Speaker Change: Super helpful, thank you again.

Speaker Change: The next question will come from Dylan Becker with William Blair. Please go ahead.

Dylan Becker: Hey guys, appreciate the questions here. Maybe, Chad, for you, there is a, we've talked in the past about what ERP refresh cycles can look like. There is a large vendor out there kind of forcing that from some of their customers.

Speaker Change: I wonder what opportunity that might create, given that kind of creates a point of data emphasis and increased visibility for you guys, if there is any at all.

Chad Collins: Yeah, yeah, absolutely, Dylan. So, in general, yes, ERP changeouts are a good opportunity for prospective customers to look at moving their trading partner connections to a new format. And then often, if they're moving to a cloud-based ERP system, then they're often looking for a cloud-based network like what SPS offers.

Chad: Yeah, absolutely, Dylan. So, in general, yes, ERP change-outs are a good opportunity for prospective customers to look at moving

Chad Collins: And I then often, if they're moving to a cloud-based ERP system, then they're often looking for doing a cloud-based network like what SPS offers. So we do expect, and especially if those are happening at the higher end of the market, which I think is the vendor you're mentioning, that that type of churn will create a positive effect in terms of people looking to migrate their training partner connections from more, say, historic or old-fashioned approaches to the more modern cloud-based approach that we offer.

Chad: their trading partner connections to a new format, and then often if they're moving to a cloud-based ERP system, then they're often looking for doing a cloud-based network like what SPS offers. So we do expect, and especially if those are happening at the higher end of the market, which I think is the vendor you're mentioning, that that type of churn will create a positive effect in terms of people looking to migrate their trading partner connections from more, say, historic or old-fashioned approaches to the more modern cloud-based approach that we offer.

Chad Collins: So we do expect, and especially if they are happening at the higher end of the market, which I think is the vendor you're mentioning, that that type of churn will create a positive effect in terms of people looking to migrate their trading partner connections from more, say, historic or old-fashioned approaches to the more modern cloud-based approach that we offer. Okay, that's really helpful. And then maybe to just touch on that with the international segment as well as any update on kind of how we should think about the fulfillment opportunity and pipeline build there, given you can have a bit more of the full fledged functionality and some of the resources to go to market.

Chad Collins: And then maybe to just touching on that with the international segment as well to any update on kind of how we should think about the fulfillment opportunity and pipeline build there, given you kind of have a bit more of a full-fledged functionality and some of the resources to go to markets. Yeah, absolutely. So, you know, we really established a beachhead for a fulfillment product in Europe with the acquisition of Thai Kinetics, which was just under a year ago. And when we did that acquisition, our philosophy was to get the benefit of that beach head to learn more about the market, to actively participate in new opportunities to service existing customers.

Speaker Change: Okay that's that's really helpful and then maybe to just touching on that with with the international segment as well to any update on kind of how we should think about the fulfillment opportunity and pipeline build there given you can have a bit more of the full-fledged functionality and some of the resources to go to markets.

Chad Collins: Yeah, absolutely. So, you know, we really established a beachhead for a fulfillment product in Europe with the acquisition of Tide Kinetics, which was just under a year ago. And when we did that acquisition, our philosophy was to use the benefit of that beachhead to learn more about the market, and to actively participate in new opportunities to service existing customers.

Speaker Change: Yeah, absolutely. So, we really established a beachhead for a fulfillment product in Europe with the acquisition of Tide Kinetics, which was just under a year ago. And when we did that acquisition, our philosophy was to get the benefit of

Speaker Change: That Beach Head to learn more about the market, to actively participate in new opportunities to service existing customers, that all continues and TIE is performing as

Chad Collins: There are that all continues and Thai is performing as expected. And I think some of the early learnings coming out of there is there does seem to be a sizable market opportunity overall there. And we're optimistic that some of our go-to-market techniques that have worked well in the North American market will be transferable to Europe.

Chad Collins: That all continues, and Tide is performing as expected. And I think some of the early learnings coming out of there is that there does seem to be a sizable market opportunity overall there. And we're optimistic that some of our go-to-market techniques that have worked well in the North American market will be transferable. Thanks, Chad.

Speaker Change: expected and I think some of the early learnings coming out of there is there does seem to be a sizable market opportunity overall there and we're optimistic that some of our go-to-market techniques that have worked well in the North American market will be transferable to Europe .

Operator: I appreciate it. Are there any additional questions? Your line is open as well.

Speaker Change: Great. Thanks, Chad. Appreciate it.

Unknown Attendee: Are there any additional questions?

Speaker Change: Joe, your line is open as well.

Unknown Attendee: Joe, your line is open as well. Yeah, so there's any additional questions? Yes, ma'am. I have people on the question queue. The seems that they're not speaking.

Operator: Yeah, so I was wondering if there were any additional questions. Yes, ma'am. I have people on the question queue, but it seems that they're not speaking.

Joe: Yeah, so I was wondering if there was any additional questions.

Operator: I'll move on to the next question. Our next question will come from Jeff VanRhee with Craig Hallam. Please go ahead. Okay. I'm here. Can you hear me?

Unknown Attendee: I'll move on to the next question.

Speaker Change: Yes, ma'am. I have people on the question queue. It seems that they're not speaking. I'll move on to the next question. Our next question will come from Jeff VanRhee with Craig Hallam. Please go ahead.

Mark Schappel: Our next question will come from Jeff Van Ree with Craig Hallam. Please go ahead.

Unknown Attendee: Great. I'm here. Can you hear me? Yeah, I do. Great.

Jeffrey Van Rhee: Yeah. Hi Jeff. Hey Jeff.

Chad Collins: Great. Hey, guys. A couple for me.

Speaker Change: Great, I'm here, can you hear me?

Unknown Attendee: Hey guys. A couple for me.

Speaker Change: Jeff, hi Jeff. Hey Jeff. Great, hey guys, couple for me, maybe just acquisition...

Unknown Attendee: Maybe just acquisition, let's start on analytics. Analytics was down sequentially, not a typical behavior for that. Just curious what happened this quarter and just thoughts on sort of, you know, the next several quarters, next several years have been in exchange.

Jeffrey Van Rhee: Maybe just acquisition – well, let's start on analytics. Analytics was down sequentially, not a typical behavior for that. Just curious what happened this quarter and just thoughts on sort of the next several quarters, next several years, if anything's changed. You may recall when we think about our business, we're really not a bellwether at all for what's happening in the economy, but analytics is an area that can be a little bit more impacted, depending on what's happening. So, in this case, we did see some customer consolidation. Now, we have a very healthy pipeline that we're seeing for the back half of this year.

Speaker Change: Well, let's start on analytics. Analytics was down sequentially, not a typical behavior for that. Just curious what happened this quarter and just thoughts on sort of, you know, next several quarters, next several years, if anything's changed.

Unknown Attendee: Sure. So, when you look at analytics in the quarter, you are correct. The growth rate was down significantly, still up, but the growth rate was down sequentially.

Speaker Change: Sure, so when you look at analytics in the quarter, you are correct. The growth rate was down sequentially, still up, but the growth rate was down sequentially.

Kimberly Nelson: And what we happen to see in the quarter, that there have been some customer consolidations that occurred in the quarter. And as such, that does have an impact in that overall analytics revenue.

Speaker Change: And what we happen to see in the quarter, that there have been some customer consolidations that occurred in the quarter, and as such, that does have an impact in that overall analytics revenue. You may recall when we think about our business, we're really not a bellwether at all for what's happening in the economy, but analytics is an area that can be a little bit more impacted depending on what's happening. So in this case, we did see some customer consolidations.

Kimberly Nelson: You may recall, we think about our business; you know, we're really not about whether at all for what's happening in the economy. But analytics is an area that can be a little bit more impacted depending on what's happening. So, in this case, we did see some customer consolidations.

Kimberly K. Nelson: So our expectation is that we'll exit this year. Okay. Yeah, okay, that's helpful. And then you said you took a close look at the enablement campaigns in the second half of the year, and obviously, it seems to be a bit more focused on the ARPU expansions. Any other observations, breadth and depth type of campaigns that are going on?

Unknown Attendee: Now we have a very healthy pipeline that we're seeing for the back half of this year. So our expectation is that we'll exit this year. Probably let's call it high single digits, you know, somewhat similar to where we were from an annual growth rate last year, probably high single digits. Okay. In two year-over-year growth. Yeah. Okay. That's helpful.

Speaker Change: Now, we have a very healthy pipeline that we're seeing for the back half of this year. So, our expectation is that we'll exit this year probably, let's call it high single digits, you know, somewhat similar to where we were from an annual growth rate last year, probably high single digits.

Speaker Change: [inaudible]

Kimberly Nelson: And then you said you took a close look at the enablement campaigns in the second half of the year. And obviously it seems to be a bit more focused on the RPU expansions. Any other observations, breadth and depth type of campaigns that are going on, you know, just, I don't know if you took that deep dive. Curious if there are any other insights into what those enable campaigns look like. Yeah, the overall sort of volume of campaigns and also the number of, you know, supplier opportunities we expect to get in front of during those campaigns all look positive in terms of the total volume.

Speaker Change: Yep, okay, that's helpful.

Speaker Change: And then you said you took a close look at the enablement campaigns in the second half of the year, and obviously it seems to be a bit more focused on the ARPU expansions. Any other observations, breadth and depth, type of campaigns that are going on? Just, I don't know, if you took that deep dive, I'm curious if there are any other insights into what those enablement campaigns look like.

Chad Collins: I don't know, if you took that deep dive, curious if there are any other insights into what those enablement campaigns look like. Yeah, the overall sort of volume of campaigns and also the number of, you know, supplier opportunities we expect to get in front of during those campaigns all look positive in terms of the total volume. And then when we kind of just look at what the likely mix is to be inside of that, we do expect to find a slightly higher proportion of existing customers just in this particular set that we're seeing in the second half of 2024, but overall, the kind of total volume of programs and suppliers in those programs looks quite positive. Okay, great, thanks. I appreciate it. The next question will come from Mark Schappel. With Loop Capital, please go ahead, and others. Mr. Schappel, your line is open.

Speaker Change: Yeah

Speaker Change: The overall sort of volume of campaigns and also the number of supplier opportunities we expect to get in front of during those campaigns all look positive in terms of the total volume. And then when we kind of just look at what the likely mix is to be inside of that, we do expect to find a little bit higher proportion of existing customers just on this particular set that we're seeing in the second half of 2024. But overall, the kind of total volume of programs and suppliers in those programs looks quite positive.

Unknown Attendee: And then when we kind of just look at what the likely mix is to be inside of that, we do expect to find a little bit higher proportion of existing customers. Just on this particular set that we're seeing in the second half of 2024, but overall that that's kind of total volume of programs and suppliers in those programs looks way possible. Okay. Great. Thanks.

Speaker Change: Okay, great, thanks, appreciate it.

Mark Schappel: The next question will come from Mark Shappell with Loop Capital. Please go ahead. Mr. Shappell, your line is open.

Speaker Change: The next question will come from Mark Schappel.

Speaker Change: With Loop Capital, please go ahead.

Chad Collins: Hi. Thank you for taking my question. Just one and just building on an earlier question, Chad, you know, other retail-focused software vendors out there have noted a bit more choppiness than usual this quarter. And I was just wondering if you could just comment on that and whether you've seen any change in the demand environment over the last 90 days or so.

Speaker Change: Mr. Schappel, your line is open.

Mark William Schappel: Hi, thank you for taking my question. Just one, and building on an earlier question, Chad, other retail-focused software vendors out there have noted a bit more choppiness than usual this quarter, and I was just wondering if you could just comment on that and whether you've seen any change in the demand environment over the last 90 days or so. Yeah, yeah.

Mark William Schappel: Hi, thank you for taking my question. Just one and just building on an earlier question, Chad, you know other retail focused software vendors out there have noted a bit more

Chad: choppiness than usual this quarter and I was just wondering if you could just comment on that and whether you've seen any change in the demand environment over the last 90 days or so.

Chad Collins: Yeah, so just as a reminder, we're really not a bellwether for the total economy nor the total retail environment just based on our business model. In terms of specific retail dynamics, though, you know, we do talk to a lot of retailers and their suppliers. We are hearing that there still is quite a bit of uncertainty there and certainly about the macro economy a little now about the election and how all this is going to affect consumer purchases. The other thing that I would offer based on these conversations, as well as there does appear to be some more consolidation occurring, and particularly on the supplier side of the retail ecosystem.

Chad Collins: So just as a reminder, we're really not a bellwether for the total economy nor for the Total Retail Environment, just based on our business model. In terms of specific retail dynamics, though, you know, we do talk to a lot of retailers and their suppliers. We are hearing that there is still quite a bit of uncertainty, uncertainty about the macroeconomy, a little now about the election, and how all this is going to affect consumer purchases.

Chad: Yeah. Yeah. So just as a reminder, we're really not a bellwether for the total economy nor the –

Speaker Change: We're going to talk a little bit about the total retail environment just based on our business model. In terms of specific retail dynamics, though, we do talk to a lot of retailers and their suppliers. We are hearing that there still is quite a bit of uncertainty there, uncertainty about the macro economy, a little now about the election and how all this is going to affect consumer purchases.

Chad Collins: The other thing that I would offer, based on these conversations, as well, is that there does appear to be some more consolidation occurring, and particularly on the supplier side of the retail ecosystem, but, you know, we really remain committed to helping those retail suppliers and 3PLs in these times and in the future. Great, thank you. The next question will come from George Kurosawa with Citi. Please go ahead.

Speaker Change: The other thing that I would offer based on these conversations, as well as there does appear to be some more consolidation occurring, and particularly on the supplier side of the retail ecosystem, but, you know, we really remain committed to helping those retailer suppliers and 3PLs.

Chad Collins: But you know, we really remain committed to helping those retailers, suppliers, and 3PLs in these times.

Speaker Change: in these times and in the future.

George Kurosawa: The next question will come from George Kurosawa with City. Please go ahead. All right, thanks for taking the question.

Speaker Change: Great, thank you.

Speaker Change: The next question will come from George Kurosawa with Citi. Please go ahead.

George Michael Kurosawa: Hi, thanks for taking the question, maybe just kind of building on the last question, and totally understood that you guys aren't, you know, a bellwether for the economy. But maybe a similar question on kind of SMB health. You know, that's been kind of a focus area for, for a lot of software businesses, and just want to confirm that, you know, this customer growth dynamic you've been calling out, there's no kind of like churn element to that. And just, you know, any comments on kind of where your SMB supplier base is at?

Kimberly Nelson: Maybe just kind of building on the last question and totally understood that you guys aren't, you know, so this customer growth dynamic, even calling out, there's no kind of like turn element to that, and just any comments on where your SMB supplier base is at. So when we look in the corner, the turn is, you know, pretty consistent with where turn has been, so that hasn't been an area that stood out specific in the corner. Obviously, there is, you know, in general in the retail environment to Chad's point, there is, you know, uncertainty there from both, you know, retailers, suppliers, as well as third party logistics providers. But specific in the corner, there really wasn't a lot of change in our turn number.

George Michael Kurosawa: Hi, thanks for taking the question. Maybe just kind of building on the last question, I totally understood that you guys aren't, you know, bellwether for the economy, but maybe a similar question on kind of SMB health, you know, that's been kind of a focus area for a lot of software businesses, and just want to confirm that, you know, this customer growth

Speaker Change: dynamic you've been calling out there's there's no kind of like churn element to that and just you know any comments on kind of where your SMB supplier base is at

Kimberly K. Nelson: So when we look at the quarter, the churn is, you know, pretty consistent with where churn has been. So that hasn't been an area that stood out specifically in the quarter. Obviously, there is, you know, in general in the retail environment, to Chad's point, there is, you know, uncertainty there from both retailers, suppliers, as well as third party logistics providers. But specific to this quarter, there really wasn't a lot of change in our churn numbers.

Speaker Change: So when we look in the corridor, the churn is pretty consistent with where churn has been. So that hasn't been an area that stood out specific in the corridor. Obviously, there is...

Speaker Change: You know, in general, in the retail environment to Chad's point, there is, you know, uncertainty there from both, you know, retailers, suppliers, as well as third-party logistics providers. But specific in the quarter, there really wasn't a lot of change in our churn number.

Kimberly K. Nelson: Okay, perfect. And then a quick follow-up, Kim. I think you've talked about expecting to see some gross margin leverage in the second half. Is that still kind of in line with your expectations? And maybe you could help us think about kind of the cadence and magnitude of that move.

Unknown Attendee: Okay, perfect.

Kimberly Nelson: And then a quick follow-up, Kim, I think you've talked about expecting to see some gross margin leverage in the second half. Is that still kind of in line with your expectations? Maybe you can help us think about kind of the cadence and magnitude that that must. Thank you. Sure, so when we think about the comment we made on our, well, in February, our Q48 call that remains that our expectation is that we do see the opportunity to grow gross margin over time, primarily for going into various investments we made, scaling opportunities, et cetera.

Kim: Okay, perfect. And then a quick follow-up, Kim, I think you've talked about expecting to see some gross margin leverage in the second half. Is that still kind of in line with your expectations and maybe if you could help us think about kind of the cadence and magnitude of that move? Thank you.

Kimberly K. Nelson: Thank you. Sure. So when we think about the comment we made on our, well, February, our Q4 earnings call, that remains our expectation is that we do see the opportunity to grow gross margin over time, primarily due to going into various investments we made, scaling opportunities, etc. And we still do anticipate that you'll begin to see that in the latter half of this year. Q2 was higher than Q1, but still pretty in line with last year.

Kim: Sure, so when we think about the comment we made on our, well in February , our Q4 earnings call, that remains, that our expectation is that we do see the opportunity to grow gross margin over time, primarily for going into

Unknown Attendee: And we still do anticipate that you'll begin to see that in the latter half of this year. Q2 was higher than Q1, but still pretty in line with last year, so our expectations remain the same that you'll start to see some of that gross margin improvement starting here in Q3. Helpful, thanks for taking the questions.

Kim: various investments we made, scaling opportunities, et cetera.

Speaker Change: And we still do anticipate that you'll begin to see that in the latter half of this year. Q2 was higher than Q1, but still pretty in line with last year. So our expectations remain the same, that you'll start to see some of that gross margin improvement starting here in Q3.

Kimberly K. Nelson: So our expectations remain the same, that you'll start to see some of that gross margin improvement starting here. Helpful. Thanks for taking the question. Again, if you have a question, please press star, then 1. Our next question will come from Joe Vruwink with Baird. Please go ahead.

Speaker Change: Helpful. Thanks for taking the questions.

Joseph Vruwink: Again, if you have a question, please press store, then one. Our next question will come from Joe Vierwink with beard. Please go ahead. Hi, great. Thanks. I wanted to follow up on the net new customer dynamic, and I know I'm repeating myself from a pause call, but the lack of net new inbound in the current year. Does that create the potential for air pockets in future periods just around wallet share games, particularly when next year you'll be config exams, you know, this year and even last year, that was a very strong stretch of wallet share games in your existing base.

Speaker Change: Again, if you have a question, please press star, then 1. Our next question will come from Joe Vruwink with Baird. Please go ahead.

Joseph D. Vruwink: Hi, great, thanks. I wanted to follow up on the net new customer dynamic, and I know I'm repeating myself from a past call, but the lack of net new inbounds in the current year, does that create the potential for air pockets in future periods just around wallet share gains, particularly when next year you'll be comping against this year and even last year, which was a very strong stretch of wallet share gains in your existing base. I'm just wondering if not replenishing the feeder for that conduit will have any ramifications later on. Yeah, Joe, I mean, I think it's a very good question and logical.

Joseph D. Vruwink: Hi, great, thanks. I wanted to follow up on the net new customer dynamic, and I know I'm repeating myself from a past call, but the lack of net new inbounds in the current year

Joseph D. Vruwink: Does that create the potential for air pockets in future periods just around wallet share gains, particularly when next year you'll be comping against, you know, this year and even last year, that was a very strong stretch of wallet share gains in your existing base?

Joseph Vruwink: I'm just wondering if kind of not replenishing the feeder for that conduit has any ramifications later on.

Joseph D. Vruwink: I'm just wondering if kind of not replenishing the feeder for that conduit has any ramification later on.

Kimberly Nelson: Yeah, Joe, I mean, I think very good question and logical. I think, you know, we feel confident based on our, you know, very proven track record of increasing that wallet share. Historically, and I'd say also a history of, you know, across these, this balance of new subscribing customers and wallet share. That it not always, you know, over time, it's grown fairly proportionally; certainly within any given quarter or any given year. There's been periods where it's been stronger on the new subscribing customers and stronger on the wallet share. So I would expect that we would continue that pattern of increasing wallet share, and given enough enough quarters, that kind of comes back to the mean, if you will, between the balance.

Chad Collins: I think, you know, we feel confident based on our, you know, very proven track record of increasing that wallet share historically. And I'd also say, you know, across these, this balance of new subscribing customers and wallet share that is not always, you know, over time, it's grown fairly proportionally, certainly within any given quarter or any given year, there have been periods where it's been stronger on the new subscribing customers and stronger on the wallet share. So I would expect that we would continue that pattern of increasing wallet share, and given enough, enough quarters, that it kind of comes back to the mean, if you will, between the balance. Okay, great.

Joseph D. Vruwink: Yeah, Joe, I mean, I think very good question and logical. I think, you know, we feel confident based on our you know

Speaker Change: And I think that's a very proven track record of increasing that wallet share historically. And I'd say also a history of, you know, across these...

Speaker Change: This balance of new subscribing customers and wallet share that is not always, you know, over time, it's grown fairly.

Speaker Change: Proportionally, certainly within any given quarter or any given year, there's been periods where it's been stronger on the new subscribing customers and stronger on the wallet share. So I would expect that we would continue that pattern of

Speaker Change: increasing wallet share and given enough enough quarters that it kind of comes back to the mean if you will between the balance of the two.

Kimberly Nelson: on the two.

Kimberly Nelson: Okay, great. And then on the updated financial guidance, when I back into 4Q numbers, it looks like an acceleration in EBITDA growth, and then quite a big step up in adjusted earnings, like north of $1 there, anything related to just expense timing, or maybe below the line items to take into account towards the end of the year. Sure, so when you think about our expectations that we, let's, I'll just go back to on our February earnings call, our Q4 earnings call, we said expectations for the year on where our EBITDA would be. And what you noticed in our April or Q1 earnings call, we increased our expectations for the year, really based on the beating Q1.

Kimberly K. Nelson: And then on the updated financial guidance, when I back into 4Q numbers, it looks like an acceleration in EBITDA growth and then quite a big step up in adjusted earnings, like north of $1. Anything related to just expense timing or maybe below the line items to take into account towards the end of the year? Sure.

Speaker Change: Hopefully great.

Speaker Change: And then on the updated financial guidance.

Speaker Change: When I back into 4Q numbers, it looks like an acceleration in EBITDA growth.

Speaker Change: And then quite a big step up in adjusted earnings, like north of a dollar there. Anything related to just expense timing or maybe below-the-line items to take into account towards the end of the year?

Kimberly K. Nelson: So when you think about our expectations that we set, let's go back to our February earnings call, right, our Q4 earnings call, we set expectations for the year based on where our EBITDA is. And what you noticed in our April earnings call, or our Q1 earnings call, we increased our expectations for the year really based on the beat in Q1. You'll see the same thing happen here in Q2. So we took our beat in Q2, and we added it to the year.

Speaker Change: Sure, so when you think about our expectations that we, let's, I'll just go back to our February earnings call, right, our Q4 earnings call, we set expectations for the year on where our EBITDA would be.

Speaker Change: And what you noticed in our April , or our Q1 earnings call, we increased our expectations for the year really based on the beat in Q1. You'll see the same thing happen here in Q2. So we took our beat in Q2 and we added it to the year.

Kimberly Nelson: You'll see the same thing happened here in Q2, so we took our beating Q2 and we added it to the year. So a way you can think about that is, as a company, our implied expectation of what that EBITDA would be really has not changed. Now from your side, as you don't have our own like internal quarterly, we just give you annual and then the, you know, the upcoming quarter.

Kimberly K. Nelson: So a way you can think about that is, as a company, our implied expectations of what that EBITDA would be really have not changed. Now, from your side, as you don't have our own, like, internal quarterly; we just give you the annual and then the, you know, the upcoming quarter. What you don't have is sort of the timing of where there's different spend that we're making in the company. But from our perspective, there's really nothing that's different or deviated from what our expectations were starting back when we guided for the full year.

Speaker Change: So a way you can think about that is, as a company, our implied expectations of what that EBITDA would be really has not changed. Now, from your side, as you don't have our own, like, internal quarterly, we just give you annual and then the, you know, the upcoming quarter.

Kimberly Nelson: What you don't have is sort of the timing of where there's different spend that we're making in the company, but from our perspective, there's really nothing that's different or deviated from what our expectations were starting back when we guided for the full year. So set another way, a little bit more of that spend relative to revenue coming in the beginning part of the year and a little bit less as we exit the year.

Speaker Change: What you don't have is sort of the timing of where there's different spend that we're making in the company. But from our perspective, there's really nothing that's different or deviated from what our expectations were starting back when we guided for the full year.

Kimberly K. Nelson: So said another way, a little bit more of that spend relative to revenue coming in the beginning part of the year and a little bit less as we exit. And just on the earnings number, Kim, I think to get the $3.65, that's like $1.15 in earnings and $4.02. Is there anything below the line? There really should not be, no, you should, if you look at the, to your point, there's a higher call, it's EBITDA, right? That implies EBITDA coming in in Q4. And then there's a corresponding, how does that translate down to expectations to get you down to EPS?

Speaker Change: So said another way, a little bit more of that spend relative to revenue coming in the beginning part of the year and a little bit less as we exit the year.

Kimberly Nelson: And just on the yearnings number, Kim, I think to get the 365, that's like $1.15 in earnings and 42. Is there anything below the line? There really should not be. No, you should, if you look at your point, there's a bit higher call at the EBITDA, right, that is implied EBITDA coming in in Q4, and then there's a corresponding, how does that translate down to expectations to get you down to EPS? Okay, great. Thank you very much.

Kim: And just on the earnings number, Kim, I think to get the $3.65, that's like $1.15 in earnings and $4.02, is there anything below the line?

Kim: There really should not be, no.

Speaker Change: If you look at the, to your point, there's a higher, call it the EBITDA, right, implied EBITDA coming in in Q4, and then there's a corresponding, how does that translate down to expectations to get you down to EPS?

Operator: Okay, great. Thank you very much. This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect. © BF-WATCH TV 2021, ?? ?? ?? ?? © BF-WATCH TV 2021, ?? ?? © BF-WATCH TV 2021, © The Ultimate Parody Site!

Unknown Attendee: This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation.

Kim: Okay, great. Thank you very much.

Speaker Change: This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.

Unknown Attendee: You may now disconnect.

Speaker Change: Thank you for watching!

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