SPS Commerce, Inc. (SPSC) Q3 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the SPS Commerce Q3 2019 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. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Irmina Blaszczyk. Please go ahead, ma'am.

Thank you, Josh. Good afternoon, everyone and thank you for joining us on SPS Commerce Third Quarter 2019 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 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 and adjusted EBITDA measures including reconciliations of these measures with comparable GAAP measures. And with that, I will turn the call over to Archie.

Thanks, Irmina, and welcome, everyone. In the third quarter of 2019, we delivered strong performance ahead of our financial targets, while continuing to deliver best-in-class technology and full-service experience to our partners and customers across the retail supply-chain. For the third quarter, revenue grew 13% to $70.9 million and recurring revenue grew 13%. Adjusted EBITDA grew 26% to $18.1 million. We are also proud to report that the number of recurring revenue customers in the third quarter has reached over 30000, nearly 3 times the number of customers since we went public. We attribute this success to the power of our network and the broad portfolio of SPS Commerce solutions. E-commerce and omni-channel retail continued to present growth opportunities for retailers and suppliers and SPS continues to offer unmatched comprehensive solutions to those in need of EDI. Academy Sports and Outdoors is an example of a retailer who is undergoing a large retail transformation project in partnership with Cognizant, one of the world's leading professional services company. EDI was identified as a top priority for Academy to more effectively manage their trading partnerships including inventory management, product delivery and order fulfillment accuracy. Given the scale of the project, Academy chose to outsource EDI to SPS Commerce including onboarding of new and existing suppliers. Our continued focus on cultivating relationships with retailers and suppliers is also paying dividends in Europe. For example, SPS is leveraging strong partnerships with sporty and leisure apparel vendors such as Adidas, Puma, VF Corporation, Craft and Dorel in a coordinated effort to entice retailers to share their point-of-sale data with suppliers through the SPS analytics network. More and more retailers now recognize the benefits of collaboration in the omni-channel world and we have seen a number of European retailers in the SPS analytics network more than triple since 2015. SPS is also a go-to provider of full service EDI for international suppliers who are looking to partner with U.S. retailers. The Humble Company, a supplier of ecofriendly health and wellness products was founded in Sweden and launched in the U.S. in 2017. To meet U.S. retailers' EDI requirements, The Humble Company partnered with SPS Commerce. With a growing number of retailers already selling their product the company is developing a scalable infrastructure to support them and their customers today and tomorrow. In summary, as retailers and suppliers continue to embrace the evolution of e-commerce omni-channel and retail SPS Commerce is well-positioned to address the changed management needs of trading partners around the globe with the world's largest cloud-based retail network, best-in-class technology and full-service experience. With that, I'll turn it over to Kim to discuss our financial results.

Thanks, Archie. We had a great third quarter. Revenue for the quarter was $70.9 million, a 13% increase over Q3 of last year, and represented our 75th consecutive quarter of revenue growth. Recurring revenue this quarter grew 13% year-over-year. The total number of recurring revenue customers increased 14% year-over-year to approximately 30,500, and wallet share was about flat year-over-year at approximately 8,800. As a reminder, in December 2018, we announced the acquisition of CovalentWorks. At the time, we stated that we expect our customer count to increase by approximately 2000 and our wallet share to decrease by approximately $500 in 2019 due to CovalentWorks' smaller average customer size. For the quarter, adjusted EBITDA was $18.1 million compared to $14.4 million in Q3 of last year. We ended the quarter with total cash and marketable securities of approximately $201 million, and repurchased approximately $6 million of SPS shares. In addition, the Board of Directors has authorized an increase and extension of the previously announced stock repurchase program, which originally authorized the company to purchase up to $50 million of its outstanding common stock. That amount has been increased by the Board to $100 million. Under the original program, the company repurchased over $40 million through September 30. The Board also authorized an extension of the original expiration date from November 2, 2019 to November 2, 2021. Now turning to guidance. For the fourth quarter of 2019, we expect revenue to be in the range of $72.2 million to $72.8 million. We expect adjusted EBITDA to be in the range of $17.9 million to $18.4 million. We expect fully diluted earnings per share to be approximately $0.19 to $0.20 with fully diluted weighted average shares outstanding of approximately 36.2 million shares. We expect non-GAAP diluted earnings per share to be approximately $0.29 to $0.30 with stock-based compensation expense of approximately $3.4 million, depreciation expense of approximately $3.1 million and amortization expense of approximately $1.6 million. For the full year, we expect revenue to be in the range of $278.6 million to $279.2 million, representing 12% growth over 2018. We expect adjusted EBITDA to be in the range of $68.8 million to $69.3 million, representing approximately 34% to 35% growth over 2018. We expect fully diluted earnings per share to be in the range of $0.87 to $0.89, and we expect fully diluted weighted average shares outstanding of approximately 36 million shares. We expect non-GAAP diluted earnings per share to be in the range of $1.21 to $1.23 with stock-based compensation expense of approximately $14.7 million, depreciation expense of approximately $11.2 million and amortization expense to be approximately $5.5 million. For the forecast, investors should model a 30% effective tax rate calculated on GAAP pre-tax net earnings. For 2020, we will provide detailed guidance on our Q4 earnings conference call. However, for modeling purposes, we expect to deliver 20% annual EBITDA dollar growth over our 2019 annual EBITDA guidance and at least 10% annual revenue growth over our 2019 annual revenue guidance. In summary, SPS Commerce continues to execute on its targets, proving efficiency in our business model and leveraging our growing network of strategic relationships retailers and suppliers to address the multibillion-dollar market opportunity ahead of us. And with that, I'd like to open the call for questions.

Thank you. [Operator Instructions] Our first question comes from Scott Berg with Needham. You may proceed with your question.

Hi, guys. Thanks and congrats on a great quarter. I guess a couple for me. Archie, I got to start off with the obligatory macro question that's on everyone's mind, and I say it with regards to your customer adds -- your organic customer adds in the quarter. I'm not looking at my model, but 660 or 670 seriously one of your better quarters that you've seen over the last two years. I guess what do you see in there you're attributing any of the strength to? And are you seeing any sort of maybe changes to the demand environment today?

Yeah. I think for the quarter, we had a very strong retail quarter on the community enablement campaigns, which leads to the customer adds. I think overall Scott, when I look at the retail environment, I would characterize it as clearly stabilizing and we feel pretty good. I don't necessarily see an acceleration, but I clearly see a stabilization in the overall retail environment.

Got it. Helpful. And then a follow-up question for either of you on the share repurchase program. The other $50 million seems to makes sense, especially with the cash flow that you're generating. I guess a broader question more on M&A and capital structure going forward is, do you find ways to be more aggressive and spend the excess cash that you're throwing off today? Or does the strategy that we see employed over the last 10-years continue to kind of remain true here going forward?

Yes. We -- from the M&A standpoint, we're trying to be extremely active, but we're going to be disciplined. It needs to fit our vision. It needs to fit our criteria and we're disciplined enough to not overpay as well. So -- but we continue to be aggressive and active, but we'll only do the deals that will help us for the long-term.

That's all I have at the moment. Thanks for taking my questions.

Thank you. Our next question comes from Jason Celino with KeyBanc Capital Markets. You may proceed with your question.

Hey, guys. Can you hear me okay?

Yes.

Yes.

Great. I kind of only just have one kind of long-winded question. But can you just talk about MAPADOC a little bit? Do you guys have any customer overlap, any characteristics on the types of customers they have the industry the regions they serve and -- or that they compete very well? Thanks.

Yes. So MAPADOC has been a long-term partner of SPS Commerce really built -- the company was really built to be a partner for SPS Commerce. And it's really the last mile of integration back into the ERP system and so there was significant overlap. And in -- overlap on that and how that affects things as well.

Sure. So when you -- Jason when you think about the MAPADOC acquisition to Archie's point there certainly was overlap as -- because they were a partner of ours for many years. What you would see with our financials, if you want to think about it from the form of the incrementals to what is new, in the quarter there was about 100 customers that came to us from the MAPADOC acquisition. And at that time we announced that MAPADOC acquisition, we said it relatively nominal for us right now. It impacted revenue by about $100,000 in the quarter. But at that time, we also had provided our view as it relates to 2020 that we expect MAPADOC to generate an incremental $2 million in 2020 and about a $1 million on the bottom line or $1 million to adjusted EBITDA in 2020.

Great. That’s really helpful. Thank you.

Thank you. Our next question comes from Koji Ikeda with Oppenheimer. You may proceed with your question.

Thanks for taking my question and congrats on a really nice quarter. Question for either Archie or Kim. On the analytics product I know you guys had a really good first half of analytics where they've grown in the kind of in the mid- to high single-digits. I guess any sort of commentary there on the analytics? I know you called out REI as a customer last quarter? Were there any good customer wins at analytics? Or any sort of commentary on analytics would be helpful?

Yes. I think overall as we've stated in the past, we're really optimistic on analytics as far as our long-term total addressable market and adds. It's just a matter of moving our priorities for the retailers. And as I mentioned earlier, we think the retail environment has stabilized, so we're really excited about what's happening there, but it's not a big -- not a massive change. We are excited about what's happening in Europe on the analytics side. Again that's really off a very small base, so you're not going to see meaningful revenue changes for 2020 or 2021, but it really helps us in the long-term revenue growth I think that we can see from that.

Thanks, Archie for that. And maybe a question for Kim. On the deferred revenue, I was kind of looking at my model and I noticed that on a sequential basis it declined. And I noticed kind of there's some seasonality there in the third quarter usually. I guess could you just walk us through some of the puts and takes there on what would cause that sort of seasonality in the deferred in this quarter?

Yes. For the most part, most of our business, the deferred revenue is going to be related to the setup fees that for GAAP purposes gets recognized ratably over roughly a two-year time period on the P&L. Majority of our customers we bill monthly or receive the cash monthly. So we're a little bit different than maybe some other SaaS companies as it reflects on the deferred revenue. So in any given quarter outside of Q1, you may see some slight differences between the short term and the long-term, but nothing really of note. In Q1, you do tend to see the deferred revenue a little bit different and that is because we do have a handful of some of our customers through a prior acquisition that do pay us a year in advance. But that you see reflected in the Q1 on the deferred revenue.

Great, thanks for that. I appreciate it and great quarter. Thanks for taking my question.

Thanks, Koji.

Thank you. And our next question comes from Tom Roderick with Stifel. You may proceed with your question.

Hi Kim, hi Archie thanks for taking my questions. Kim, let me start with you. Just the gross margins jumped up a little bit quarter-on-quarter. There seems to be any some sort of seasonality in that as well, but gradually creeping a little bit higher. Wondering if you can kind of talk about that trend line, how we ought to think about it going forward, particularly as you wrap in MAPADOC. And that becomes a little bit more -- tiny bit more prominent in the numbers. But just generally speaking, as analytics continues to perhaps do a little bit better than it was last year, and MAPADOC sort of works its way in. How should we think about the gross margins going forward here?

Sure. So, gross margin along with our other expenses, looking at it on an annual basis tends to be more indicative from a modelling than in a particular quarter. However, to answer your question specific on gross margin this year, you'll notice that, it was up a little bit higher in Q1. It was a little bit lower in Q2. On our earnings call last quarter, I have given some commentary to say for the back half of 2019, you should expect the gross margin to be similar to what it was in the front half of 2019. And so that's really where we ended up is very in line with that commentary. So, for the back half of this year and you should expect it similar to the front half of 2019 which gets you to that -- to the annual expectations for gross margin. We haven't given color detail on 2020, as an example of how you should expect or model line by line. But longer-term, we believe there's opportunity for continued gross margin expansions, into the low to mid-70s, as we continue to scale.

Excellent and then, turning to the sales and marketing line, I don't know if you've got an update for us or can give us a general sense as to how the sales hiring is progressing with the sales quota-carrying headcount number looks like. I would love to hear that if you have it. And then, just broadly speaking from a philosophical level, Archie or Kim, whoever wants to take this. As you continue to grow double-digits 10% thought for next year. And I look at the sales and marketing line as it's kind of flattish to even down, if I look at the three quarters this year versus the three quarters last year, in terms of non-GAAP expenses. How do you think that ought to run? Do you need to grow that level grow that capacity? Do you have enough capacity to grow that 10% next year? Just generally speaking, how do you think about the need to add more heads to be able to continue growing 10% for next year and beyond?

Sure. So when you look at that sales and marketing. And as such if you were to go back a couple of years, you'll see that, that sales and marketing spend as a percent of revenue last year as well as into this year is at a lower rate than what you saw from some of the prior years. A lot of that has to do with some of the changes that we've made over the years to the sales organization. And a simple way to think about it is we're actually getting more output or more productivity, from our sales organization, in the way that we have been organized in 2018 and 2019. That's working for us very well and we feel good about our capacity and our output to hit our expectations, from a revenue perspective. When you think about 2020, and ongoing we will of course continue to add resources, as we see fit and as is necessary in order to keep up with the capacity and meet the demand from our top line revenue. So feel good about the way we're organized, feel really good about the team we have in place. But rest assured we're going to continue to add resources, as appropriate to continue to go after that large opportunity in front of us.

Great, thank you very much. Nice job guys.

Thank you. Our next question comes from David Hynes with Canaccord. You may proceed with your question.

Hey, thanks very much, guys. Kim, maybe this one's for you. As we think about kind of the drivers of growth, obviously, wallet share a little bit of obscured now with the covalent acquisition in the works. Is there any way that you can help us think about how that same-store sales engine has been contributing to growth? I guess, is the number of retail integrations continuing to increase? And I guess once we come out of this CovalentWorks-impacted period, what should that wallet share growth look like?

Sure. So, with our business both adding customers and then getting more and more revenue from those customers have been important drivers to our overall business and our overall recurring revenue growth and that remains. Nothing is different there. To your point right now some of the metrics look a little bit odd in the fact that customer growth is showing 14% and the revenue per average recurring revenue is about flat, when you're looking at it from a year-over-year basis right now. And again, those metrics are impacted by in particular that CovalentWorks acquisition. So, the comment that we gave at the time we did CovalentWorks is that that added about 2,000 customers and it would have a negative impact of about $500 on that average revenue per recurring revenue customers just due to the fact that those customers are smaller in size. So from a modeling perspective that should give you some information to help you figure out how you would model it going forward. Our expectations are both continuing to add more and more customers as well as have the opportunity to get more and more wallet share from our customers over time that both of those will be very important drivers to our overall recurring revenue.

Yeah. Got it. Okay. And you guys have clearly outperformed that $500 expected headwinds, so I assume the rest of the business is outperforming. And then I guess, Archie, Koji asked earlier about Collaboration Analytics. Can you just remind us how long does an instance take to stand up? And so if you take REI for example, right like are they in production now? And then I guess as you get a customer like that up and running are you able to leverage them for reference selling where you can go to other retailers and say like, hey look this is the return that REI is seeing from their investment. You guys should consider this too. Or just how does that playbook run?

Yeah. So typically to stand somebody up technologically, we can do it extremely fast. But the biggest thing that needs to occur for a successful program is that the retailer – we really need to consult with the retailer, so that they understand exactly what they're going to share and how they're going to share. So that has to be well thought through. And then you need a well-thought through message to go out to the suppliers, and then we go out to the suppliers. You literally could do it in probably a few weeks. But if you want to do it right and you want to have a lasting impact for the retailer and for SPS Commerce, it's probably a 90 to 120 day process. Once, we start doing the enablement campaign those suppliers are typically stood up almost immediately. And yes REI is in production.

Yeah. And then just the reference selling piece of it, I mean, does that happen? Or is it really just – it depends on when the retailer gets the buy-in around sharing their data et cetera? I mean, there's nothing really you can do to drive that.

Yeah. No. I mean, I think most time it is a very reference able process and – but I think the flywheel of the network the more you have in the network the easier it is to build the network. And that's what we're trying to do in analytics is just exactly what we did in fulfillment over 18 years. It's really to try to build that network. And the larger the network the more value the suppliers see. And the more value the supplier see, the more likely they are to sign up.

Yep. Yep. Okay. Makes perfect sense. All right. Thanks, guys.

Thank you. Our next question comes from Pat Walravens with JMP Securities. Your may proceed with your question.

Hello. Great, thank you and congratulations. Hey. So, Archie can you – you mentioned Europe having – the European retailers wanting to access – or the European suppliers wanting to access the U.S. retailers. Can you just talk sort of at a high level what are sort of the key points in terms of how Europe is different than the U.S. for you guys? And how much of your business is it today and how much can be long-term?

So, two different parts of the business, Pat. The first is on an analytics, we are utilizing many of our large U.S. or North American-based suppliers to help us get into the European retailers. That market is actually more – much more global. And I think the productization and everything else it's very similar to our marketplace. I think as far as fulfillment, it's a little more complex because each country is its own market with sometimes very different dynamics in each market. I think long-term, I don't know the specific percentages, but I think it can be a meaningful percentage of the business. I would think we would be like most other companies the size of Europe compared with the U.S. -- you could be in the 30%, 40% long-term in a mature state.

And where are we today?

So international overall is less than 10% of our revenue and Europe is just -- a small portion of that today.

Okay. Great. Thank you.

Thank you. Our next question comes from Jeff Van Rhee with Craig-Hallum. You may proceed with your question.

Great. I'll add my congratulations. Thanks for taking the questions. A couple for me. I think first just high level. If you look at the TAM, I think, you've talked of US$100,000, 100,000 international addressable. But today the penetration is primarily in the U.S. I think you mentioned and gave the numbers. You're close to 30,000. So the question is on the remaining $70,000 in the U.S. what's different about the remaining TAM than the ones you've already captured? And I think of it specifically in suppliers size average number of connections what you might have to displace to win that business. Just talk about the remaining TAM in the U.S. if you would?

Yes, I think, it's very similar to the other 30,000. I think the two very different types of customers; one, the smallest customers that are just starting out perhaps not doing any EDI. A lot of times we're getting those and community enablement campaigns where they're really a start-up business and they can go from 1 to 2 to 5 to 10 retailers pretty quickly. Then I would say the other piece is really people that have done EDI for a long period of time. They have legacy software. And when I think about it and when we've -- what we've seen is if you're a supplier that for example has 10, 15, 20 retailers -- if your -- the less your environment is changing, the less likely you are to make a change. When -- the best time to get them to change will be obviously if they change the ERP systems. It's a brand-new integration and nobody -- not a high percentage are going to stick with legacy software or they see that their business starts to be acquisitive or they start seeing more and more of the retailers do dropship or they're adding retailers. They realize they're going to be making an investment into the legacy software and that is also a natural time to shift.

In general, would you say that the remaining TAM and addressable suppliers are larger in size or smaller in size than the existing base of customers?

I would say it's pretty similar. Probably spent a little towards larger just because if you look at the history of SPS Commerce and when we went public in 2010, we're really just servicing the smaller -- smaller suppliers. So we've been at that longer than we have been mid and large.

Got it. Great. And then last for me just on the -- Kim on the R&D side. If I looked at the non-GAAP R&D up from $5.9 million to $7 million pretty substantial $1.1 million. Sequentially usually runs more linear than that. Can you just talk about the jump there?

Sure. So R&D over time all-in R&D so not the non-GAAP, but just the reported R&D as a percentage of revenue has been anywhere from around 9% to 12% given the -- give or take the year or the quarter. You're correct. We did see an uptick there and that's really driven by our ability to attract and hire some great tech talent. And that's really going to be something that's going to help us going forward as we continue to focus on our products and not sort of rest on our laurels. We want to make sure that our overall customer experience is fabulous and we want to continue to be making some modifications into our products. So we had a really strong quarter in hiring and recruiting that you see translating into the R&D. Again, still within that range of about 9% to 12% closer to about 11% this quarter, but primarily headcount related.

Okay. Great. Thank you.

Thank you. Our next question comes from Tim Klasell with Northland Securities. You may proceed with your question.

Yes. I'll throw in my congratulations as well. Just two quick questions. Obviously, for the next year initial thoughts 20% EBITDA growth 10% revenue growth. So obviously getting some margin expansion there. Should we just sort of trend line what we've been seeing for the last couple of years? Or is there something maybe you've got planned that's a little bit different that might you might want to be aware of as we're building on our models for next year? Thank you.

Sure. So if you were to look at the margin expansion in 2018 as well as in 2019 that rate of that margin expansion is -- it was higher than what you had seen in some prior years. And that -- you saw a lot of that come through the form of sales and marketing, a lot of that due to the efficiencies that I talked about a little bit earlier on this call. So, what you have is the company's view not the detail at this point, but just our high-level view that we've provided for modeling purposes of how to think about top line and bottom line. The specifics of line by line is not something that we're commenting on at this point. However, longer term sort of time aside, we see opportunity in -- primarily really in all the line items with this conception of R&D, we do think R&D as a percentage of revenue is something we were going to be continuing to invest in for our products, features technology, et cetera. But outside of that, we see opportunity in cost of goods sold, sales and marketing as well as G&A to continue to scale over time.

Okay. Good, good. And then just again a movement of the products, I jumped on the call just a touch late, but the standalone dropship product, how did that do this quarter? In the last quarter you made some comments that it seemed to do better. How did that trend into this quarter? Thank you.

Yeah. It continues to be -- we don't break that out. And a lot of times, it's part of a bigger program. But it continues to get traction. We continue to get meetings with retailers, and it's an important part of our go-forward sales strategy.

Okay. Great. Thank you very much. Appreciate it.

Thank you. Our next question comes from Mark Schappel with Benchmark. Your may proceed with your question.

Hi. Thank you for taking my question and nice job on the quarter. Archie, starting with you, with respect to MAPADOCs, they had several customers outside of your core sectors of retail and consumer goods. I was wondering if you expect to move all of those customers over to your platform?

So, from a customer standpoint, we plan on being very customer centric, which is the way we run our business for a long period of time. So, those customers we want to make well aware of the other options they have, now that they're part of the SPS Commerce family. But all those customers will have the ability to remain doing business as they see fit. So, we're going to take that a long, long view with those customers. And we think over time, we have a great product to sell them. And when the appropriate time is there for those customers, they will probably most likely come to the SPS Commerce.

Great. And then with respect to future deals, is it your view that there are dozens or even maybe hundreds of MAPADOC-like vendors out there that could be M&A candidates?

Well, I would say there's dozens of acquisition opportunities for us. MAPADOC was a little bit unique in the fact that they've completely built their business around SPS Commerce. We've had a long-term relationship with them. We know them. We knew all of the people very well. It was one of the things that attracted us to them is the quality of the people that were part of MAPADOC were extremely strong and have been a positive influence on SPS and our culture and everything else. So, there's a few, but I think MAPADOC from that standpoint was a little bit unique.

Great. Thanks. And then Kim, could you just give us an update on customer churn?

Sure. No updates still around 13% from a customer churn, and about half that or roughly 7% on a dollar churn.

Great, thank you. That’s all for me. Thanks.

Thank you. [Operator Instructions] Our next question comes from Matt Pfau with William Blair. You may proceed with your question.

Hey, guys. This is David on for Matt. I just had a quick question on CovalentWorks. I know your commentary in the past said that the customer migration should have finished around the end of this past quarter. So I was wondering if that migration has completed? And if there any things you'd like to call out in terms of customer wins on that size of customer since they were kind of smaller customers that came over?

Yeah. We are calling it a completed transition and we view it as a very strong success story in the fact that I think the reaction from the customers has been very positive. Moving to a world-class platform like SPS Commerce has been a big plus for them. We've seen some – again, off a very small base, but we've seen some up-sells, cross-sells from there and just feel really good about the acquisition in general.

Thank you. Our next question comes from David Gearhart with First Analysis. You may proceed with your question.

Hi. Good afternoon. Thank you for taking my questions. You talked a little bit about the sales and marketing the team and productivity and needing to add over time, as the business grows. I just wanted to ask, how is the churn within the team and the stability of the team? Is your churn among your sales and marketing team roughly stable or better than it has been in the past post changes? Just wanted that commented. And then I'd like to do a little bit of a follow-up on international. You had mentioned Europe and growth among customers on the analytic side. Just wondering if you could give us some color on the portion of net additions that are international just in general? And how international is just trending from an addition standpoint? That's it for me. Thank you.

Yeah. The turnover in sales is slightly down from the past. I think we have a strong stable team. It's a very talented team. I think the one thing that the sales organization does a phenomenal job is training, so that we have capacity and we have -- not only have the current capacity for today, but we're developing capacity for tomorrow. I think I feel really good about that. As far as Europe and international, we feel really good about where we're going there.

Okay. That's it for me. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.