SPS(US:SPSC)2022-07-27 23:50Financial Data and Key Metrics Changes - Total revenue grew 15% year-over-year to $109.2 million, marking the 86th consecutive quarter of revenue growth [20][24] - Recurring revenue increased by 16% year-over-year, with the total number of recurring revenue customers rising 12% to approximately 38,650 [20][24] - Adjusted EBITDA grew 13% to $30.9 million compared to $27.3 million in Q2 of the previous year [21][24] Business Line Data and Key Metrics Changes - Demand for fulfillment services grew 17% year-over-year, while analytics services saw a 12% increase [9] - The company reported a 4% increase in wallet share, reaching $10,550 [20][24] Market Data and Key Metrics Changes - The company continues to capitalize on the retail industry's investments in supply chain management efficiency and digital transformation [10][18] - The international business, particularly in Europe and Australia, is performing well, with no signs of slowdown despite macroeconomic challenges [51] Company Strategy and Development Direction - The company is focused on supporting trading partners with full-service EDI to enhance collaboration and efficiency in supply chain management [12][18] - The acquisition of GCommerce aims to strengthen the company's position in the automotive aftermarket and expand its customer base [17][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledges inflationary pressures and uncertainties in the global economy but maintains that the operating model and growth expectations remain unchanged [22][24] - The company expects revenue for Q3 2022 to be in the range of $113.4 million to $114.4 million, representing approximately 16% growth year-over-year [24][25] Other Important Information - The company ended the quarter with approximately $259 million in cash and investments and repurchased about $15 million of its shares [21] - A new stock repurchase program of up to $50 million has been authorized, effective August 26, 2022 [21] Q&A Session Summary Question: Impact of volume changes on pricing model - Management indicated that their revenue is primarily derived from trading partner relationships rather than transaction volumes, which tend to remain stable even during economic downturns [31] Question: Customer churn during difficult economic times - Churn has remained constant at around 12% annually, with historical increases of about 1% during tougher economic periods, but no current signs of increased churn [33] Question: Delayed ERP decisions and their impact - Management has not observed any slowdown in their business model despite broader economic concerns, as retailers continue to invest in supply chain efficiencies [37][38] Question: GCommerce acquisition details - The acquisition added approximately 500 customers with an average revenue per user (ARPU) of around $12,000, slightly above the company's average ARPU [39][40] Question: Strength in specific vertical markets - The company has seen consistent performance across various verticals, with slightly more momentum in the distribution area [50] Question: International business performance - The analytics product in Europe is experiencing strong momentum, unaffected by economic challenges, while Australia also shows positive performance [51] Question: Pipeline for Carrier Service solution - The Carrier Service solution is contributing modestly, with growing momentum and a developing sales pipeline [52] Question: Investment strategy for the remainder of the year - The company plans to continue investing in hiring, particularly in customer success and sales, to meet existing and future growth opportunities [74]