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spk03: 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.
spk00: 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.
spk04: 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?
spk01: Well, I'll let Zach give you most of that color. I would say from my perspective, we're benefiting from a strong referenceability in the industry, particularly in the health and beauty sector. I think we have the right to win every single time we go to bat for a health and beauty brand. I think we're also benefiting from a few struggling competitors. We're not going to name them, but they appear to be giving us... the opportunity to have serious conversations with some of their clients. And I think we're benefiting from health and beauty brands really focusing their attention on their direct-to-consumer channel. It's become their most important channel. And because of that change, we're seeing a higher level of investment, and the bar is being raised around the experience that the consumer expects.
spk03: Mike, I'd completely echo that comment. I'd go one step further just as it relates to really the direct consumer focus. I think it goes back all the way to the pandemic forward. And we're seeing a lot of momentum in the direct consumer channel, specifically a lot of investment there, primarily because it's the most profitable channel for our customers, and it should be. And they're looking for ways to differentiate that channel, continue to grow that channel, and we're seeing that be the source of a lot of the investment that we're seeing. in the channel we're really well positioned to capture that also in the commentary we try to have some comments as it relates to really what we're seeing from health and beauty and jewelry and collectibles as a whole with us really targeting premium and luxury brands are proving to be quite resilient they're proving to continue to want to invest and want to grow during this time and as such we're well positioned to capture that opportunity and move forward
spk04: That's great. And it sounds like everything's going according to plan with the two new facilities coming online. I was hoping you could find a way to help us better understand in terms of the potential revenue impact over time. When you have a new facility, could you quantify how much more revenue capacity that may give you?
spk03: We don't normally provide direct correlation how much revenue that is. We do expect with those two facilities coming online really in Q2 and early Q3 as we outline in the script, we'll start to see an elevation in terms of revenue that steers towards the guidance that we have for the whole year. That being said, we also expect that we'll continue to see a need in out years to continue to invest in more facilities. And really with the demand we're seeing in the pipeline, that's something that we look at as we head into 24 for incremental opportunities as we strive for double-digit growth rates next year.
spk04: That's great. And then one question for you, Tom. Obviously, it was a great quarter from a free cash flow perspective granted you know there's a big working capital benefit but you know still two and a half million otherwise I'd love to get your perspective just done on how people should be thinking about you know the cash flow dynamics going forward yeah so as we as we take a look at the business this year with our forecasted and
spk02: guidance that we've provided we do expect kind of free cash flow to be around break even or slightly positive for the year and that is after considering the capital expenditure components that we have in place including all the growth capex that we talked about on the call so you know we feel like we're strong from a financial foundation standpoint in order to be able to support the ongoing growth of the business we'll continue to look for opportunities of how we finance some of those capex as to whether or not we other types of financing instruments to be put in place in order to properly support the liquidity position of the business, both this year and long term. Great. Thanks, guys.
spk00: Thanks, Adam. Thank you. At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Willoughby for closing remarks.
spk01: Thank you, Crystal. I'd like to thank everyone that attended the call this afternoon. We're hopefully, as you can tell from our tone, incredibly optimistic about the business and bullish on the future. Look forward to future times that we can spend with you. And as always, we're available to our investors for calls, and we look forward to seeing you at some conferences in the future as well. Thank you.
spk00: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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