SPS Commerce, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the SPS Commerce Q1 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ms. Armina Blaszczak. Please go ahead, ma'am.

Thank you, Elaine. Good afternoon, everyone, and thank you for joining us on SPS Commerce First Quarter 2021 Conference Call. We will make certain statements today, including with respect to our expected financial results, go-to-market strategy and efforts designed to increase our traction and penetration with retailers and other customers. These statements are forward-looking, and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to our SEC filings, specifically our Form 10-K, as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available at our website, spscommerce.com, and at SEC's website, sec.gov. In addition, we are providing a historical data sheet for easy reference on our investor relations section of our website, spscommerce.com. During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP earnings per share. In our press release and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP and adjusted dividend measures, including reconciliations of these measures with GAAP-comparable measures. And with that, I will turn the call over to Archie.

Thanks, Hermina, and welcome, everyone. We delivered a strong first quarter and a great start to the year as dynamics in the retail industry continue to fuel the accelerated shift to e-commerce. Supply chain shortcomings that surfaced during the pandemic have forced the industry to adapt, and we have seen numerous examples across various verticals of the efficiencies that can be realized with EDI as retailers and suppliers invest in supply chain automation. According to the U.S. Census Bureau, e-commerce sales for 2020 grew over 30% from 2019 and accounted for 14% of total sales. SPS Commerce is well-positioned to capitalize on this ongoing trend as we help our customers succeed in their digital transformation. The accelerated adoption of EDI continues to drive strong momentum and fulfillment, which grew 21% year-over-year, including the data masons acquisition. Total revenue grew 21% to $90.1 million, and recurring revenue grew 18%. Adjusted EBITDA grew 25%. to $25.5 million. The number of recurring revenue customers grew by 700 to approximately 33,850. New and existing customers span from e-commerce services to brick and mortar retailers. Stitch Fix is a leading e-commerce personal styling service. To enable ongoing business expansion, Stitch Fix needed to completely overhaul their technology landscape. They chose SPS for our ability to onboard vendors in volume, provide full-service support, and offer expertise in vendor and distribution management. With a goal of eventually having all order fulfillment managed electronically, SPS helped onboard their global vendor community, and over the course of only five weeks, we saw more than 90% of all orders committed to electronic trading with Stitch Fix. Williams-Sonoma is a multi-channel specialty retailer of high-quality home products. The company has been focused on expanding its shift to consumer distribution channel capabilities since early 2020 and engaged with SPS to onboard over 500 dropship vendors to EDI. We continue to work closely with Williams-Sonoma to drive efficiencies across their supply chain. We are also seeing consumer shopping trends driving the need for retail analytics. Studies have already shown that two-thirds of consumers consider sustainability prior to making a product purchase. Some regions across the U.S. may be slightly more conscious than others. So for retailers or suppliers, analytic software can help identify which cities are best to target with eco-friendly products and make sure these shelves are always fully stocked. Ongoing investments in our business have also paid dividends. expanding our addressable market and strengthening our competitive differentiation. The acquisition of data masons, for example, has already resulted in increased momentum in the Microsoft space with new customer wins in the U.S. and Australia. Our portfolio continues to evolve to support our customers. Our fulfillment product has always had the ability to manage orders sent to distribution centers, stores, and directly to consumers. Over the past year, we launched add-on products like carrier service to support customers who book shipments themselves. In March, we announced that SPS Commerce Fulfillment has expanded its support of e-commerce platforms and marketplaces. The added capabilities consolidate orders from e-commerce platforms like Shopify, BigCommerce, and WooCommerce, as well as popular marketplaces like Walmart, Amazon, and eBay into a single fulfillment solution. This allows suppliers to manage orders from multiple sales channels using a single platform to share data with logistics partners, integrate data with AP and ERP systems, and manage shipments. Also, within our API environment, partners such as SupplyPipe have begun to leverage our pre-built integrations to retailers and develop additional add-on services to allow more of a supplier's fulfillment workflow to be centralized on the SPS fulfillment platform. Since this time last year, the world faced unprecedented challenges. SPS Commerce remains committed to provide mission-critical and uninterrupted service to suppliers and retailers. The SPS team continues to work hard to support supply chain continuity and improve efficiencies amid evolving industry dynamics. The investments we made over the years have positioned us for the long-term growth as we leverage the power of the SPS retail network. Lastly, as a Minneapolis-based company, we wanted to comment on the April 20th verdict, finding police officer Derek Chauvin guilty of all charges related to the murder of George Floyd. The verdict does not lessen the grief felt for the loss of countless victims of police brutality. but I hope it helps to heal the community and bring real and lasting change. There is still a lot of work to reduce systemic racism, and SBS remains committed to action at organizational, leadership, and individual levels. With that, I'll turn it over to Kim to discuss our financial results.