SPS(US:SPSC)2020-05-03 14:18Financial Data and Key Metrics Changes - Revenue for Q1 2020 grew 11% year-over-year to $74.2 million, marking the 77th consecutive quarter of revenue growth [23] - Recurring revenue increased by 12% year-over-year, with the total number of recurring revenue customers rising 5% to approximately 31,000 [23] - Adjusted EBITDA grew 24% to $20.4 million compared to $16.5 million in Q1 of the previous year [23][24] - Total cash and marketable securities at the end of the quarter were approximately $215 million, with $12 million of shares repurchased during the quarter [23] Business Line Data and Key Metrics Changes - The company launched a new carrier service in March 2020, which is being utilized by customers to fulfill orders for major retailers like Amazon and Costco [15] - The fulfillment product is considered mission-critical, with suppliers adapting to increased online sales due to the pandemic [51] Market Data and Key Metrics Changes - Approximately half of the company's network has seen increased transaction volume since March, while some have experienced a decline [16] - The grocery supply chain has seen an increase in onboarding new suppliers, particularly in foodservice and grocery distributors [17] Company Strategy and Development Direction - The company aims to expand its market presence and invest in product innovation despite withdrawing its 2020 annual guidance due to pandemic-related uncertainties [26][28] - The focus is on supporting trading partner relationships and enhancing e-commerce capabilities, which are expected to drive long-term demand for SPS Commerce solutions [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term opportunities despite acknowledging the uncertainty surrounding the pandemic's impact on the retail landscape [18][19] - The company is well-positioned to provide support to customers and partners due to its cloud-native operational model [19] Other Important Information - The company has a large network of over 31,000 trading partners, which is crucial for maintaining business continuity during the pandemic [18] - Management noted that the dynamics of the retail environment are evolving, with increased demand for automation and e-commerce solutions [16][19] Q&A Session Summary Question: Inquiry about the new carrier service monetization model - The carrier service is an add-on product with a modest monthly fee that simplifies processes and serves as a retention tool for customers [33] Question: Discussion on supply chain changes due to the pandemic - The company is seeing a significant increase in drop-ship activities, with some retailers experiencing up to 1,000% growth [34] Question: Differences between the current environment and the 2008 recession - The current environment includes a health crisis and remote work dynamics, which differ from the 2008 recession [40] Question: Customer churn and bankruptcy concerns - The company has not yet seen an uptick in churn or bankruptcies, maintaining an annualized churn rate of 13% [53] Question: EDI's position in retail IT projects - EDI solutions are expected to move up the priority list for retailers as they seek efficiency amid the pandemic [60] Question: Potential for M&A in the EDI vendor market - There may be opportunities for M&A as smaller EDI vendors face challenges, but the company is focused on building relationships with them [81]