PFSweb, Inc.

per ACV per booking, adding to the power and promise of our pipeline throughout the first half of this year. For our contact center services, we continue to see these as a source of value, both in our existing engagements and in sales opportunities for potential upsells and bundles with our existing fulfillment offerings. We expect to see these services represent a smaller percentage of our overall revenue as we continue to see higher growth rates in sales conversion in our pipeline for our fulfillment and transportation services. While our immediate pipeline and sales efforts are largely geared towards fulfillment opportunities, we continue to see opportunities for our contact center services with both new and existing customers, and we will continue to optimize how we support and deploy our contact center services, monitoring trends towards lower costs, nearshore markets, and AI adoption and the subsequent effects these have on existing client programs. To further complement our fulfillment offerings and the strength of our multi-node platform, we've also continued to support our fulfillment as a service products. These products enhance the agility of our platform, which allows us to quickly open multiple fulfillment centers and rapidly scale new client engagement and enhance the innovation in our sales cycle. This agility and flexibility with both new and existing clients has continued to differentiate our services, fueling our growth and allowing our clients agile solutions, be it through pop-up fulfillment centers, retail fulfillment, or rapidly scaling client solutions within our own centers. Our first quarter results are a testament to our strategic progress, and they give us a solid foundation to bring this momentum forward into Q2. In addition to reiterating our full year 2023 outlook, we believe we have refined our operational foundation and our pipeline to facilitate sustainable double-digit growth over the longer term. With these prudent and ongoing cost-cutting measures we have implemented, we expect our service fee gross margins to remain stable within the 20% to 25% range, consistent with our fulfillment-oriented service mix. With our ongoing work to address robust customer and fulfillment demand, ramp our multi-node fulfillment capabilities for our growing client base, and operate from a leaner and more streamlined foundation, I believe we are well-positioned to continue executing on our growth objectives through the balance of 2023 and beyond. With that, we'll now open up the call for Q&A. Thank you.

At this time, we will conduct the question and answer session. To ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, you will simply press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of George Sutton of Craig Holland. Your line is now open.

Thank you. This is Adam on for George. Mike, it sounds like Q2 is off to a really good start in terms of the pipeline. I was hoping you could provide a little more detail on that. What exactly are you hearing from clients and why are you converting at such a high rate at the moment given the economic backdrop?