SPS(US:SPSC)2022-10-28 02:16Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $114.5 million, representing a 17% increase year-over-year, marking the 87th consecutive quarter of revenue growth [16] - Recurring revenue grew 18% year-over-year, with the total number of recurring revenue customers increasing by 12% to approximately 39,550 [16] - Adjusted EBITDA increased by 31% to $34.7 million compared to $26.5 million in Q3 of the previous year [17] - The company ended the quarter with total cash and investments of approximately $237 million and repurchased approximately $12 million of shares [17] Business Line Data and Key Metrics Changes - The fulfillment and analytics segments experienced double-digit revenue growth, contributing to the overall revenue increase [7] - The wallet share increased by 5% to $10,900, indicating improved customer engagement and spending [16] Market Data and Key Metrics Changes - The company noted that 42% of consumers expect two-day shipping, while 61% prefer next-day delivery, highlighting the growing demand for efficient supply chain solutions [10] - The acquisition of InterTrade expanded the company's network and capabilities in product information and transaction data exchange [13] Company Strategy and Development Direction - The company aims to strengthen its competitive advantage by expanding its network across various industries and enhancing automation solutions [14] - Future growth is expected to be driven by community enablement campaigns and acquisitions, with a long-term target for adjusted EBITDA margin of 35% [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential impacts from inflationary pressures and uncertainties in the global economy but maintained that the operating model and growth expectations remain unchanged [18] - For Q4 2022, the company expects revenue in the range of $120 million to $121 million, representing approximately 17% to 18% year-over-year growth [19] Other Important Information - The company expects annual revenue growth of 15% or greater beyond 2022, with adjusted EBITDA projected to be approximately $151 million to $153 million in 2023 [23] - The company has a disciplined approach to acquisitions, with a significant cash balance available for strategic opportunities [31] Q&A Session Summary Question: Impact of macroeconomic conditions on new customer acquisition - Management noted that during challenging times, community enablement campaigns tend to increase as retailers seek efficiency, and they do not monetize retailers, making it cost-effective for them to add efficiency [27] Question: Changes in global supply chains and their effect on business - Management indicated that while shipping rates are decreasing, it does not significantly impact customer acquisition as the need for trading partners remains [35] Question: Insights on recent acquisitions and their integration - Management stated that acquisitions are part of a long-term strategy, and they are actively seeking opportunities while remaining disciplined [31] Question: Observations on transaction volumes in the current retail environment - Management confirmed that transaction volumes have seen some decline in drop-ship as e-commerce growth slows, but they remain optimistic about their omnichannel capabilities [48] Question: Customer cohort observations and economic potential - Management indicated that new customer cohorts continue to show strong potential for upselling, and the average supplier payment remains consistent [62] Question: Guidance on adjusted EBITDA and investment priorities for 2023 - Management highlighted that the pace of hiring and investments will impact EBITDA growth, but they expect to be well-positioned for 2023 [46]