SPS Commerce, Inc. (SPSC) Q3 2021 Earnings Report, Transcript and Summary

Hello. Thank you for standing by, and welcome to the SPS Commerce Q3 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Irmina Blaszczyk. Please go ahead.

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 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 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 and 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.

Thanks, Irmina, and welcome, everyone. Ongoing momentum in e-commerce continues to drive demand for SPS' 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 omnichannel fulfillment, and SPS Commerce is uniquely positioned to support our customers as they conform to today's retail dynamics. Ruby Has, 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 Has integrates with SPS Commerce to access their customer systems, allowing for seamless order flow, inventory management and delivery. This partnership has proven to be invaluable for brands like Koio with 5 retail locations, wholesale partners and the majority of sales happening through their website. Koio 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 nonpremium prices. Co-founded by Dax Shepard 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 1-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' strong network and our retailer experience, combined with the Data Masons 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 time lines. Buc-ee'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, Buc-ee'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.

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 $0.24 to $0.25 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 $0.41 to $0.42, 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% growth over 2020. We expect adjusted EBITDA to be in the range of $105.6 million to $106.1 million, representing 21% to 22% 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 pretax net earnings. Beyond 2021, we continue to believe that e-commerce dynamics will fuel strong momentum in 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 in 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.

[Operator Instructions] Our first question comes from Matt Pfau with William Blair.

Archie, the customer examples that you gave seem to have a similar theme where they're 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 Masons business there?

Yes. Thanks, Matt. We definitely have seen a slight uptick overall in movement of -- 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 can also -- 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 2 separate organizations. So I think what our premise of purchasing Data Masons is on is clearly playing out very, very nicely.

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?

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.

Our next question comes from Scott Berg with Needham & Company.

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 to your overall business. That seems to be at least an incremental change, whether it's drop ship or more -- or retailers just needing more vendors, et cetera. But we've seen 2 big retailers in the space or, I guess, e-commerce vendors in 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 off-line at all in the current macro environment maybe shift how you think about demand for your products here over the next couple of years?

Thanks, Scott. I think when we think of the retail world, we really think it's moving to a true omnichannel, 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 a 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 that if one goes down and the other is 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 from our -- we're more or less indifferent where it comes. But the stressing of omnichannel, I think, is very, very important to us and that 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 our -- that's how we think of omnichannel.

All right. And 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 your general kind of M&A strategy going forward? You're a bigger company today than what you were 3 or 4 years ago, obviously, you're throwing out 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 kind of acquisitions that have been smart? They've obviously handled the business properly, but they've been smaller in size.

Sure. So there's sort of 2 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 -- 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 a 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 -- 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 we'll continue to acquire if it makes both the business and the financial sense.

Congrats on the great quarter again.

Our next question comes from Jeff Van Rhee with Craig-Hallum.

Just a couple for me. I think, Kim, just to start with the gross margins, it dipped down. I don't recall, I think you had guided a few things were 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?

Sure. Yes, 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 the great customer adds that we've been seeing that we would be investing in a couple of 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 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.

And just directionally, how do you think about Q3 to Q4?

As far as gross margins or -- well, in general, we -- you -- 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 have a -- 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. That's it. 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 just always has felt there's a lot of room to cross-sell into this base other incremental capabilities. So I guess 2 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 2 questions embedded in there.

Yes, nice 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 is -- we'll 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, 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.

Yes. Fair enough. And 1 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?

It’s something we’ve talked about. I think there’s 2 things that we consider almost a deal-by-deal headwind or tailwind, Jeff. One is inventory – more along the line of what we call inventory challenges. Can they get inventory? 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. We didn’t put it in the 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 2 things that on a deal-by-deal basis are actually sometimes helping us and sometimes negatively affecting us.

Our next question comes from Jason Celino with KeyBanc Capital Markets.

Great. Maybe 1 for Archie. Drop ship, it's been an important area of strength. And it's interesting this week to see some private funding for some other EDI vendors looking to enhance their drop-ship capabilities, certainly validates some of the tailwinds that you've been talking about. But maybe as it relates to competition, how do you see the competitive environment today for drop ship? And maybe where do you see it going?

Yes. Our competition, 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 1/10 of the industry norms is that. And then really coming back to that whole omnichannel, we're seeing people either attack the wholesale side, the e-commerce side, and they go after 1 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 omnichannel world. So you're seeing brick-and-mortar players really use that omnichannel and they're using their stores as a distribution center. And that's where we're really well positioned. So when I hear people just think about drop ship, and I don't -- 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.

Interesting. Yes, makes sense. And then maybe one quick one for Kim. I mean you talked about it a little bit, bringing on some great talent in third quarter. But how are you feeling about sales productivity heading into next year? I know it's a tough hiring environment for every company at the moment. Just curious how you guys are feeling.

Yes. 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.

And I think our strength for the sales group is not only strong leadership at the top, but the depth of the leadership and 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 our retail headquarters and mimicking a distribution center. So I think the training group also within all of SBS and within sales is also a huge competitive advantage in both recruiting and retaining talent.

Our next question comes from Joe Vruwink with Baird.

First, I don't know what the Vruwink house would do if Hello Bello went down. So I suppose I should be thanking you all for that. 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 some -- accelerate some top line within the scope of '22?

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 EBITDA 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 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 that -- 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 opportunity 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.

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 its 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?

Yes. 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 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 is executing extremely well from both the sales side but also the customer success side and the technology side.

And so what we’re seeing is maybe just circling back to the pipeline that was in place entering 2020, but for a lot of reasons, maybe was not executed upon?

I think that’s right. I think there’s a momentum coming back and the momentum – and then that product was more subject to people putting projects on hold because it’s a discretionary spend or reducing the amount of their spend in ‘20, 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.

Our next question comes from Mark Schappel with Loop Capital.

Archie, starting with you, going back to the recently announced partnership with C.H. Robinson, I was wondering if you could just provide some additional color around how you'll be working together. What was C.H. Robinson doing before SPS Commerce? Were they using another EDI vendor with some manual process? Maybe you could just shed some light on that.

Yes. So I would guess in the majority cases, it was out -- for their customers, it was outside their EDI process. And so if our customers were using -- for instance, if we had customers using C.H. Robinson, they were using C.H. Robinson, they were using SPS Commerce, but it wasn't in an integrated fashion. In other words, you couldn't access C.H. 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 C.H. Robinson. So I think this is a -- 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 C.H. Robinson, which we appreciate as well.

Okay. Great. And then, Kim, one question for you. When Data Masons was acquired, I think they were expected to add about $5 million in revenue a quarter. I was wondering if it’s just fair to assume that the Data Masons business came in around that ballpark this quarter.

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.

Our next question comes from Nehal Chokshi with Northland Capital.

Great quarter, again. Staying on Data Masons, have you seen some success in converting some of that nonrecurring into recurring revenue?

Well, yes, absolutely. And the nice thing about the acquisition, which we speculate 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 for them to convert into recurring revenue in the full service solution at SPS Commerce. And that is happening as we speculated.

Great. And then -- so overall revenue decelerated from 25% year-over-year growth to 23% year-over-year growth June to September that the recurring revenue accelerated from 18% to 20%. And so is the success with the Data Masons converting from nonrecurring to recurring the main driver behind that? Or is there something else going on as well?

So the -- just to reiterate the numbers, the GAAP 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. And so -- 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.

Got it. Understood. And then you had, I think, the strongest customer add quarter on an organic basis ever, and it continues to accelerate. Each quarter, it continues to be even better. What is the driver behind that again?

Sure. So if you look at the last, I believe, 4 quarters, you've seen nice customer adds. And this quarter, to your point, is the highest from a, call it, that organic growth perspective. 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.

[Operator Instructions] Our next question comes from Parker Lane with Stifel.

Kim, Archie, it's Max Osnowitz on 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 drop shipping in e-commerce and even direct-to-consumer over the last couple of years?

Yes. 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 -- 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 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.

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?

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 some -- 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.

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.