SPS Commerce, Inc.

Good day and welcome to the SPS Commerce second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ermina Blaszczyk, Investor Relations for SPS Commerce. Please go ahead.

Thank you, Drew. Good afternoon, everyone, and thank you for joining us on SPS Commerce second quarter 2023 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 on 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 the investor relations section of our website, spscommerce.com. During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP income 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 financial measures, including reconciliations of these measures with comparable GAAP measures. And with that, I will turn the call over to Archie.

Thank you, Romina, and welcome, everyone. Before I proceed with my prepared remarks, I'd like to mention the CEO announcement we made earlier this month. In October, I will transition to the role of Executive Chair of the Board as we welcome our new CEO, Chad Collins. Given Chad's leadership and industry experience, I believe he is uniquely qualified to lead SPS through its next chapter of growth and innovation, capitalizing on omnichannel retail dynamics. We look forward to introducing Chad to you all on our third quarter earnings conference call. Turning to our second quarter performance, we continue to see investments in organizations across retail, fueling ongoing demand for SPS fulfillment and analytics products. Total revenue of $130.4 million grew 19% in the quarter, while recurring revenue grew 20%. In today's omni-channel world, the average consumer expects to purchase exactly what they want from where they want, looking for a consistent experience across all channels. they are pushing the limits of retailers' operations and forcing suppliers to embrace an omnichannel strategy. Since the pandemic, the increased pace and complexity of fulfillment exposed inefficiencies, which are now forcing suppliers to revitalize their supply chain. According to the 2022 MHI Annual Industry Report, a survey of over 1,000 supply chain and manufacturing leaders, 74% of respondents plan on investing in inventory and network optimization tools over the next year. For example, Moose Toys, a large manufacturer in Australia, has been an SPS fulfillment customer since 2016, expanding their network across Asia Pacific, North America, and Europe. To effectively manage their inventory, they use sell-through data from retailers for forecasting and planning. However, they were receiving the data in many different formats and had to process it manually, which caused delays in their ability to extract meaningful insights. SPS's analytics was the right solution for Moose Toys to begin aggregating, normalizing, and integrating the vast amount of data feeds from their many trading partners. They can now leverage the strategic insights derived from the data to capitalize on significant growth opportunities around the world. As trading partners strive for automation, ERP integration is another key component to solving supply chain challenges. For example, our partnership with Microsoft has been mutually beneficial over the years, and Microsoft has recently chosen to highlight SPS Commerce as the featured solution on their app store. Microsoft has been focused on migrating their customers to the cloud, and with their strong presence in retail, distribution, and manufacturing, The need for fully automated and scalable supply chain operations is a pivotal factor of these ERP migrations. SPS Commerce's deep Microsoft integration technology, multi-tenant cloud-based retail network, and full-service model is allowing Microsoft sellers and VARs to leverage best-of-breed technologies when trying to migrate customers and win new business. Just as retailers and suppliers are investing in new technologies to optimize their supply chain, SPS Commerce remains committed to delivering world-class products and excellent customer experience. By capitalizing on artificial intelligence technologies, we're already driving efficiencies throughout our organization to serve our customers and improve our product offerings. SPS is the world's largest retail cloud network, which gives us access to the depth and breadth of data necessary to leverage AI and reduce the requirements for suppliers to connect to retailers. making it much easier to implement trading partner connections. We see many opportunities to enhance our products in the future as we use AI to increase the intelligence of SPS's network, which in turn will make joining and operating within the network increasingly more efficient. We also continue to expand our portfolio and global footprint, and yesterday we announced our planned acquisition of Tye Kinetics. We believe Tye's e-invoicing capabilities will enable us to capitalize on the opportunity presented by mandatory e-invoicing regulations in Europe, while expanding our European presence to serve our growing network with access to international markets. In summary, increasing complexity in omnichannel retail is fueling investment in supply chain revitalization. SPS is well positioned to capitalize on new technologies such as AI, which are proving necessary for automation and optimization of trading partner relationships, and amplify our ability to bring our network to more retailers and suppliers faster and easier. With that, I'll turn it over to Kim to discuss our financial results.