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spk08: Hello, thank you for standing by, and welcome to the SBS Commerce Q3 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Irmina Blaszczyk. Please go ahead.
spk01: Thank you, Josh. Good afternoon, everyone, and thank you for joining us on SPS Commerce third 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 attraction 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 the 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 measures, including reconciliations of these measures with comparable GAAP measures. And with that, I will turn the call over to Archie.
spk06: Thanks, Hermina, and welcome, everyone. Ongoing momentum in e-commerce continues to drive demand for SPS's fulfillment solution, resulting in strong enablement campaign activity and another quarter of great execution. Total revenue grew 23% to $97.9 million, and recurring revenue grew 20%. Understanding evolving consumer trends is more imperative than ever. Retailers are expected to create a seamless and hassle-free shopping experience while offering extended aisle product assortment. This can only be accomplished with a true omni-channel fulfillment, and SPS Commerce is uniquely positioned to support our customers as they conform to today's retail dynamics. Ruby Haas, a fast-growing e-commerce fulfillment and logistics provider for direct-to-consumer brands and retailers, serves a range of customers to represent their products across all retail channels. Ruby Haas integrates with SPS Commerce to access their customers' systems, allowing for a seamless order flow, inventory management, and delivery. This partnership has proven to be invaluable for brands like Koyo, with five retail locations, wholesale partners, and the majority of sales happening through their website. Koyo relies on our strong partnership to ensure they're not just meeting but exceeding customer expectations when it comes to a quick, simple order and delivery experience. Evolving retail dynamics are also prompting brands to migrate their on-premise solution to a cloud ERP. which impacts EDI operations. Hello Bello is a family and baby product company making plant-based premium products at a non-premium prices. Co-founded by Dak Shepherd and Kristen Bell, the brand was transitioning to a cloud ERP and selected Microsoft Dynamics 365 to prepare and meet the operational needs of current and future growth. Having signed a one-year exclusive contract with Walmart, They had only weeks to get up and running with an EDI solution that was fully integrated with their new ERP to ensure their operations could handle the expected volume. Thanks to SPS's strong network and a retailer experience, combined with the data mason's expertise and Microsoft ERP integration, Hello Bello went from sign to go live in a matter of weeks, demonstrating how our joint solution accelerates implementation timelines. Bucky's, a gas station and convenience retailer with approximately 40 stores across the U.S., recently announced the groundbreaking of the world's largest convenience store and family travel center. With a growing number of locations, the company is looking to increase efficiencies through the supply chain by improving visibility into shipments and inventory. In conjunction with an ERP update, Bucky's is looking to automate order fulfillment across all their vendors and chose SPS Commerce for their EDI solution. As the retail landscape continues to evolve, SPS Commerce is expanding its global market leadership in providing the easiest-to-use, full-service solutions that help retailers work efficiently with their suppliers. Our network, world-class technologies, and partnerships continue to deliver and exceed our customers' expectations as they transition to a true omnichannel fulfillment model. With that, I'll turn it over to Kim to discuss our financial results.
spk00: Thanks, Archie. We delivered a strong third quarter of 2021. Revenue was $97.9 million, a 23% increase over Q3 of last year, and represented our 83rd consecutive quarter of revenue growth. Recurring revenue this quarter grew 20% year over year. The total number of recurring revenue customers increased 10% year-over-year to approximately 35,400, and wallet share increased 10% to approximately 10,350. For the quarter, adjusted EBITDA grew 14% to $26.5 million, compared to $23.2 million in Q3 of last year. We ended the quarter with total cash and investments of approximately $252 million. In addition, as our current stock buyback program is expiring on November 2, 2021, the Board of Directors has authorized a new program to repurchase up to $50 million of common stock. The program becomes effective on November 28, 2021, and is expected to expire on November 28, 2023. Now turning to guidance. For the fourth quarter of 2021, we expect revenue to be in the range of $99.9 million to $100.5 million. We expect adjusted EBITDA to be in the range of $26.3 million to $26.8 million. We expect fully diluted earnings per share to be in the range of 24 to 25 cents, with fully diluted weighted average shares outstanding of approximately 37.3 million shares. We expect non-GAAP diluted earnings per share to be in the range of 1 to 42 cents, with stock-based compensation expense of approximately $6.5 million, depreciation expense of approximately $4.1 million, and amortization expense of approximately $2.5 million. For the full year, we expect revenue to be in the range of $382.4 million to $383 million, representing 22 to 23 percent growth over 2020. We expect adjusted EBITDA to be in the range of $105.6 million to $106.1 million, representing 21 to 22 percent growth over 2020. We expect fully diluted earnings per share to be in the range of $1.10 to $1.11, with fully diluted weighted average shares outstanding of approximately 37 million shares. We expect non-GAAP diluted earnings per share to be in the range of $1.76 to $1.77, with stock-based compensation expense of approximately $27.8 million, depreciation expense of approximately $15.1 million, and amortization expense for the year of approximately $10.2 million. For the remainder of the year on a quarterly basis, investors should model a 30% effective tax rate calculated on GAAP pre-tax net earnings. Beyond 2021, we continue to believe that e-commerce dynamics will fuel strong momentum and fulfillment for the foreseeable future, and we maintain our annual revenue growth expectations of 15% or greater. We will provide detailed 2022 guidance on our Q4 earnings call, but for modeling purposes, we expect to deliver $124 million to $126 million in annual adjusted EBITDA in 2022. Beyond 2022, we expect adjusted EBITDA dollar growth of 15% to 25% as we continue to invest in the business to capitalize on market dynamics and support current and future growth. In the long term, we maintain our target model for adjusted EBITDA margin of 35%. In summary, with strong momentum and fulfillment and large growth opportunities for our analytics solution as retailers and suppliers continue to improve efficiencies across the supply chain, We believe SPS Commerce is well positioned to capitalize on a multi-billion dollar addressable market in front of us. And with that, I'd like to open the call to questions.
spk08: Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by as we compile the Q&A, Roscoe. Our first question comes from Matt Bow with William Blair. You may proceed with your question.
spk10: Thanks for taking my question and nice results. Archie, the customer examples that you gave seem to have a similar theme where they were all sort of driven by an ERP replacement. Just wondering, are you seeing an uptick in ERP replacement and specifically maybe on the Microsoft cloud dynamics part, is that upticking as well and helping out the data mason's business there?
spk06: Yeah, thanks, Matt. We definitely have seen a slight uptick overall in movement to the cloud ERPs. We obviously, with the data masons, got into the Microsoft market in a much deeper way, and we've definitely seen strong momentum there as Microsoft is really pushing towards the cloud. So that has created momentum. And I think similar to what we saw when we did the Mapadoc acquisition and everything else, it is proving out that we can execute much better for the customer, and we have a higher win rate, and we're in a better position to win those deals going to market together as opposed to together as two separate organizations. So I think what our premise of purchasing data mason's on is clearly playing out very, very nicely.
spk10: Got it. And just to follow up on that, Outside of the Microsoft ecosystem, or maybe even including that, are those ERP replacement deals driven primarily by partners, or is that an internal sales force that's increasingly driving those deals?
spk06: I would say it's both. It can be we still continue to have strong channel partners, but we're also getting deals directly. So it can either be from the ERP, from the value-added resellers and systems integrators, or direct. And I'd say all are very, very important to the sales process. Great.
spk10: Thanks, guys. Appreciate it.
spk08: Thanks. Our next question comes from Scott Berg with Needham & Company. You may proceed with your question.
spk07: Hi, Archie and Kim. Congrats on a really strong sales quarter. Those customer additions were quite good. I guess first question, Archie, A lot of the questions I've had from investors over the last 90 days since your last call was around how much of the improved e-commerce environment from the pandemic is aiding your overall business. That seems to be at least an incremental change, whether it's drop ship or retailers just needing more vendors, et cetera. But we've seen two big retailers in the space, or I guess e-commerce vendors, and Shopify, and tonight after the close, Amazon put up some kind of disappointing sales from their e-commerce area. I think it's natural to expect e-commerce to slow here going forward after the pandemic, but does that change in customers moving from online to offline at all in the current macro environment, maybe shift how you think about demand for your products here over the next couple of years?
spk06: Thanks, Scott. I think when we think of the retail world, we really think it's moving to a true omni-channel, whereas before it was e-commerce and brick-and-mortar And even when companies had both, they were separate. And now you're seeing a much more integrated play. Drop ship, pick up at store, and they're really looking for an omnichannel experience. And this is where we think, as a company in our space, we're uniquely situated to be able to deliver for our customers on that omnichannel experience. So this is where it's nice to be in both spots. If one goes down and the other, it's going up. And we did expect e-commerce has been accelerating for a long period of time now, but it had an extra amount of acceleration for the first year of the pandemic. And then we're seeing that slow down back to historical levels. And then we've had some pickup in stores. So we're more or less indifferent where it comes from. But the stressing of omnichannel, I think, is very, very important to us. And the retailers are realizing, well, we need to be ready either way. And ultimately, that's what omnichannel is. It's allowing the consumer to buy when and where they want. I mean, that's how we think of omnichannel.
spk07: All right. Then from a follow-up perspective on the new share repurchase program, I guess it's not a surprise since you've had one in place before. But how should we think about capital allocation and, you know, your general kind of M&A strategy going forward? You're a bigger company today than what you were three or four years ago, obviously. You're throwing up better cash levels. Is there an opportunity to maybe see a larger, more transformative type of acquisition at some time, whether you're consolidating the market or something else, versus some of the bite-sized, you know, kind of acquisitions that have been smart, they've obviously aided the business properly, but they've been smaller in size?
spk00: Sure. So there's sort of two questions in there. I'll tackle the capital allocation first, and then we can dig a little deeper on the M&A side. So from a capital allocation perspective, as you would expect, the board discusses this periodically. And as a company, we are cash flow positive. So where you're seeing the opportunities for capital to be deployed, there's stock buyback, and then there is M&A opportunities for us as well. So nothing really new there, just sort of restating sort of what our capital allocation approach has been. Specific on the M&A side, we remain acquisitive. Our lens tends to be somewhat narrow in the lens of, you know, primarily in the retail space where there's a network involved, software as a service. And then we look in there. We've done all different types of acquisitions, some that are pure roll-up customer acquisition, some that are geographic expansion. And then some, and more recently, you've seen it on the product side. And we certainly think that there continues to be opportunity in all of those areas. More recently, you've seen it again on the product side. So we'll continue to look to see what makes sense for us. We believe we are clearly the leader in what we're doing. We're not compelled to do acquisitions, but we certainly have the capital at our disposal. and will continue to acquire if it makes both the business and the financial sense.
spk07: Great. Thanks for taking my questions, and congrats on the great quarter again.
spk08: Thank you. Our next question comes from Jeff Vandery with Craig Howell. You may proceed with your question.
spk02: Great. Thanks. Hey, guys. Thanks for taking my questions. Just a couple from me. I think, Kim, just to start with gross margins, it dipped down. I don't recall. I think you had guided a few things we're going to change there last quarter. Just update me on gross margins, what hit it in the quarter, and how to think about it next few quarters.
spk00: Sure. To your point, last quarter we had mentioned when we provided our expectations for EBITDA for the quarter and for the full year, we had said that based on the strong fulfillment momentum as well as, you know, the great customer ads that we've been seeing, that we would be investing in a couple different areas in the business, specific in Q3, really focused on the customer experience or customer success side. And what's great in the quarter is we had lots of opportunity to get great talent on board and make sure that we you know, are hiring and retaining great talent on the customer experience to help us get our customers up and running and getting value just as quickly as possible. We also made a comment that we would be adding sales resources, particularly as we think into 2022. And that last part has been taken into account relative to our guidance that we just gave for Q4 2021.
spk02: And just directionally, how do you think about them Q3 to Q4?
spk00: as far as gross margins. Well, in general, we provide EBITDA, and so you can back into what the implied EBITDA margin is. We don't typically give that specific color on a quarter. You'll see our actual results, but what I can say more broadly is we will absolutely make sure that we are investing appropriately in both the short-term and long-term and we are very focused to make sure we continue to have an amazing customer experience to delight our customers and exceed their expectations. However, longer term, nothing has changed relative to our view that we do expect gross margins to be at least in the low 70s. Okay.
spk02: That's fair. And then just, I guess, at a higher level, though, on the quarter, I think you've talked about the carrier services product, and certainly with the network you've got in place, it's just always – has felt there's a lot of room to cross-sell into this base other incremental capabilities. So I guess two questions. Just what have you seen in terms of the uptake on the carrier services product, and how do you think about the evolution of incremental products to introduce into the customer base? Sort of steady as we go? Will we see any acceleration? Just what does the pipeline of new product look like? So I guess two questions embedded in there.
spk06: Yeah, and I start with carrier service, and then obviously, Earlier, we announced we expanded that service to partner with C.H. Robinson, which we think is a world-class company and also gets us into a broader part of the carrier service market, which we think will continue to accelerate that growth. We are excited about being able to continue to expand our TAM and add additional services. So I wouldn't see a massive acceleration in 2022, but I think there is opportunity to continue to buy TAM build and partner with companies to expand these services. Sometimes it's obviously if you have a C.H. Robinson, a very large, successful company, we're going to partner. We're obviously not going to buy. But I think there's other opportunities as we move forward to make acquisitions and in some cases also just to build. So we're very excited about where we're going in the future on that front.
spk02: Okay. And one brief last for me, if I could, then, just as it relates to the overall logistical mess going on in the country ports and otherwise, how is that reflecting in terms of your pipeline or interest levels in your products, if it is at all?
spk06: You know, it's something we've talked about. I think there's two things that we consider almost a deal-by-deal headwind or tailwind, Jeff. One is more along the line of what we call inventory challenges. Can they get inventory? Sure. And that can, in some cases, accelerate deals, and in some cases, decelerate or slow down deals. It's almost a case-by-case. So actually, when we think of 2022, we didn't put it in the headwinds and we didn't put it in tailwinds. First time in my career, we actually had a section called headwinds, tailwinds, deal-by-deal. The other is labor within our customer base. They're ready to move. We will save them labor. but do they have the resources to move it forward? So those are two things that on a deal by deal basis are actually sometimes helping us and sometimes negatively affecting us.
spk02: Got it. Great. Thanks.
spk08: Thank you. Our next question comes from Jason Selena with KeyBank Capital Markets. You may proceed with your question.
spk03: Great. Thanks for taking my questions here. Maybe one for Archie. You know, dropship, it's been an important area of strength, and it's interesting, you know, this week to see some private funding for some other EDI vendors looking to enhance, you know, their dropship capabilities. You know, it certainly validates, you know, some of the tailwinds that you've been talking about, but maybe as it relates to competition, you know, how do you see the competitive environment today for dropship, and maybe where do you see it going?
spk06: Yeah, our competition... You know, what we rely on to win our deals is our incredibly strong retail network, 3,000 retailers. First and foremost, that is our biggest competitive advantage, which I think is going to take somebody a long time to catch up because you need to do that retailer by retailer, and that is not a simple process. I think the second thing is just easy-to-use technology that we've built for 20 years, I think our third big competitive positioning is our lead generation working with these retailers. So getting thousands of leads and onboarding suppliers for retailers and having the unique ability to do that in times that are one-tenth of the industry norms is that. And then really coming back to that whole omni-channel, we're seeing people either attack the wholesale side, the e-commerce side, and they go after one or the other because it's very hard to do all. And what we're seeing is it is truly, I think the biggest pivot in this is it has become not a more e-commerce world, it's become a more omni-channel world. So you're seeing brick and mortar players really use that omni-channel and they're using their stores as distribution center. And that's where we're really well positioned. So when I hear people Just think about drop ship, and they don't think about it in the grand scheme of things. You don't have drop ship suppliers and suppliers that ship to the distribution center. It's SKU by SKU, and that can move month by month where they're going. So I think that's where we're really excited and why we're seeing an acceleration in the positioning we have.
spk03: Interesting. Yeah, makes sense. And then maybe one quick one for Kim. I mean, you talked about it a little bit, you know, bringing on, you know, some great talent in third quarter. But how are you feeling about sales productivity ending in the next year? I know it's a tough hiring environment for every company at the moment. You know, just curious how you guys are feeling.
spk00: Yep. So we have a great sales force and we'll continue to add resources that will give us even more capacity. So feeling really good going into 2022. And again, we have a lot of visibility of the opportunity that we see ahead of us in 2022. So we'll make sure that we have, again, great already internal talent, but then we will be adding additional resources to help us maintain the capacity based on the opportunities that we see there. There's still opportunity for us to get even more efficient in that area, but a lot of the work that has been done over the last few years has set the team up very well. But again, we will be adding some resources in Q4 based on the opportunities that we see in 2022.
spk06: And I think our strength for the sales group is not only strong leadership at the top, but the depth of the leadership in the sales team, and then also our sales training. I think we do just a phenomenal world-class job from a training standpoint. We actually have a simulated distribution center in our office so people can actually experience what it's like to be at a retail headquarters and mimicking a distribution center. So I think the training group also within all of SPS and within sales is also a huge competitive advantage in both recruiting and retaining talent.
spk03: Okay, perfect. Good stuff.
spk08: Thank you. Our next question comes from Joe Rewink with Baird. You may proceed with your questions.
spk09: Great. Hi, Archie and Kim. First, I don't know what the Rewink House would do if Hello Bello went down, so I suppose I should be thanking you all for that. You know, maybe I'll start just with the initial EBITDA outlook for next year. So signaling 18% growth And I guess in the context of a 15% to 25% growth framework, does the 18% is the read there that maybe next year is a little heavier of an investment year? And if that is true, does that also have an implication for revenue growth? Would you foresee being able to invest and maybe actually accelerate some top line within the scope of 22%?
spk00: So when we think about, I'm just going to do one step back and just sort of remind from a quarter ago, we had provided our views that we believe we can drive top line to be 15% or greater for the foreseeable future. And we believe that we have the ability to drive even the dollar growth between somewhere between some of that 15 to 25% year over year for the foreseeable future. And specific on the EBITDA side, you may know before we had mentioned it's about a 20% year-over-year growth. And so now that range is slightly larger to 15% to 25%. The reason for changing that range from 20% to be a little bit broader, 15% to 25%, is to take into account the fact that we've had great momentum on the fulfillment side for a lot of the reasons omnichannel that Archie's mentioned on this call. And we want to make sure, as we had that great momentum, adding a lot of customers, helping customers even more, that we make sure we have the appropriate resources to not only meet their needs but exceed their needs and expectations. And so that sort of weighs into the spend sort of in the back half of 2021 as we want to make sure that we have the appropriate resources really to keep pace with this great momentum that we've seen. So those types of investments for call it sort of the short term and long term would be some reasons why you'd see it on the lower end, closer to the 15%. In some years, you may see it closer to the high end, which would be up to that 25%. And that's because as we continue to grow, there's lots of scaling opportunities still in front of us. So the way you can look at 2022 specifically, with the expectations that we've given is that that does take into account the investments that we're making to make sure that we're doing everything appropriate for all these great new customers and great opportunities that we see in front of us. So we're going to make that investment for the short term, and then there's also the investment that helps us in the longer term. And then naturally, you'll see some scaling over time. that will translate out of those investments as well. But specific to 22, you'll see it more on the lower part of that range versus the higher part based on what we just said on our earnings call.
spk09: Okay. That's good context. My second question, it's the second quarter in a row that analytics grew at a double-digit pace. Is there maybe some building momentum, or can you maybe speak to, you know, is double-digit growth, maybe you don't want to underwrite this as a new baseline going forward, but has something changed in terms of the conversation you're having with customers or the traction you're seeing in the marketplace?
spk06: Yeah, I think overall, I mean, to remind everybody where we were going into the pandemic, we were feeling really good about analytics, and we had a fair amount of momentum from exiting 2019. And then as we thought it would, analytics got hit significantly harder. And then we also had some relief we gave to customers in Q2 and Q3. So we have some degree of lapping easier comps, but we clearly see momentum within the analytics team and the analytics group And feel pretty good. Again, we've always felt good about the product long term, but we're starting to see some momentum in that product and feel good that it's starting to carry more of its weight. And I think the team's executing extremely well from both the sales side, but also the customer success side and the technology side.
spk09: And so what we're seeing is maybe just a circling back to the pipeline that, you know, was in place entering 2020, but for, you know, a lot of reasons maybe was not executed upon.
spk06: I think that's right. I think there's a momentum coming back in the momentum. And then, you know, that product was more subject to people putting projects on hold because it's a discretionary spend or reducing the amount of their spend. especially as we look at early 2020 when people really didn't know where we were going. I mean, when you look at it, think back to March, April, May, June, we thought the world might be in for an economic disaster at that point, and people were very, very cost-conscious on that front.
spk09: Okay. I will leave it there. Thank you.
spk06: Thank you.
spk08: Thank you. Our next question comes from Mark Chappell with Loop Capital. You may proceed with your question.
spk04: Hi. Thank you for taking my question. Archie, starting with you, going back to the recently announced partnership with CH Robinson, I was wondering if you could just provide some additional color around how you'll be working together. What was CH Robinson doing before SPS Commerce? Were they using another EDI vendor? Was it a manual process? Maybe you could just shed some light on that.
spk06: Yeah, so I would guess in the majority of cases, for their customers, it was outside their ADI process. And so if our customers were using, for instance, if we had customers using CH Robinson, they were using CH Robinson, they were using SPS Commerce, but it wasn't in an integrated fashion. In other words, you couldn't access CH Robinson, their APIs, and their network without leaving the SPS Commerce platform. And so this gives the customers an integrated experience and a very quick, easy way to access CH Robinson. So I think this expands our carrier service. Obviously, they're not really in the small package area, but on the LTL area, I mean, that's where they're strong, and we think they're a world-class company, and I think it's a real advantage to our customers. obviously a revenue generator, and then it's a really nice positive for them as well. And so we have really strong support from CH Robinson, which we appreciate as well.
spk04: Okay, great. Thanks. And then, Kim, one question for you. When DataMasons was acquired, I think they were expected to add about $5 million in revenue a quarter. And I was wondering if it's just fair to assume that the DataMasons business came in around that ballpark this quarter.
spk00: Sure. So the data masons business has continued to trend about 10% greater than what our original expectations were. So we saw that the last couple of quarters. We also did see that in Q3 as well.
spk04: Great. Thank you.
spk08: Thank you. Our next question comes from Nihal Chokshi with Northland Capital. You may proceed with your question.
spk11: Yeah. Thank you. Great quarter again. Staying on data masons, have you seen some success in converting some of that non-recurring into recurring revenue?
spk06: Well, yeah, absolutely. And the nice thing about the acquisition, which we speculated would be the case, is as opposed to convincing somebody that they ought to do it differently, Microsoft is really leading the charge. So it just becomes a natural change event when somebody moves from the Microsoft on-premise to D365, it becomes a natural time to them to convert into recurring revenue in the full-service solution at SBS Commerce. And that is happening as we speculated.
spk11: Great. And then, so overall revenue decelerated from 25% year-over-year growth to 23% year-over-year growth June to September, yet the recurring revenue accelerated from 18% to 20%. And so is this... The success with the data masons converting from non-recurring to recurring, the main driver behind that, or is there something else going on as well?
spk00: So just to reiterate the numbers, the gap revenue, 25% last quarter, this quarter 23%. The recurring revenue, last quarter 22%, this quarter 20%. The 18% was a Q1 number that you're referencing, just so you have that. Wow. Gotcha. And one of the reasons as it relates to the 25 going to 23 or the 22 going to 20, do keep in mind that last year, so this really has to do with more of a comparison, so last year Q3 was the first quarter where we started to see that pretty large significant acceleration on the fulfillment side, and Q3 is now, it's the first quarter we're lapping that.
spk11: Got it. Understood. And then you had, I think, the strongest customer ad quarter on an organic basis ever, and it continues to accelerate. Each quarter continues to be even better. What is the driver behind that again?
spk00: Sure. So if you look at the last, I believe, four quarters, you've seen nice customer ads. And this quarter, to your point, is the highest from, I call it, that organic growth perspective ever. The reasons for that really have to do with that community enablement campaigns. So it's where we have relationships with retailers and we're really helping them do something different, and we roll that out to the vendor community. And so Q3 was another strong quarter of community enablement activity. Great.
spk08: Thank you. Thank you. And as a reminder, to ask a question, you will need to press star 1 on your telephone. Our next question goes from Parker Lane with Spiegel. You may proceed with your question.
spk05: Hi, Kim. Hi, Archie. It's Max Osmond with Dawn for Parker. I just want to start thinking about that 200,000 potential supplier figure that's been thrown around in the past. How has that changed since the number of suppliers maybe has gone up or down with the rise of dropshipping and e-commerce and even direct-to-consumer over the last couple of years?
spk06: Yeah, I'm not sure what exactly the number is, but we think our TAM is substantially higher just for the simple fact that we can also do business with non-EDI retailers, right? If you're a supplier and the orders, and that's one of our big initiatives going forward is making sure that for suppliers, we can capture all their orders regardless of how they're getting them so that they can utilize our add-on services. So think about our carrier service and you're going, okay, that's great. It's It's integrated right into my ASN and working with my EDI retailers, but I want to make sure I have the orders for my non-EDI retailers. So I think it continues to grow. And just naturally, the number of suppliers retailers are working with today continues to grow as well.
spk05: Got it. And then just following up on someone's question a little earlier about analytics and kind of the uptick of customers considering it once again, is there any other technology priorities that you're seeing that are coming along with that analytics thought process, or is it mostly just analytics?
spk06: Mostly just analytics. But remember, analytics starts taking an even more important role For the retailer, when their stores become distribution centers and making sure that now suppliers want to make sure they're partnering properly to get the right inventory at the right stores because the stores are now part of the e-commerce solution. And so it's not just a matter of having inventory, it's having it at the right place as well. As you can see, many retailers, they can do same-day delivery or overnight delivery fairly easily when it's coming from the store. So we think there's an increased importance from analytics going forward as we become a more omnichannel world.
spk05: Yeah, that makes a lot of sense. Thanks. Congrats on the quarter. Thanks.
spk08: Thank you, and I'm not showing any further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
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