SPS Commerce Inc (SPSC) 2018 Q4 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by.

We welcome you to the SPS Commerce Fourth Quarter and Full Year 2018 Earnings Call.

(Operator Instructions)

As a reminder, this conference call may be recorded.

I would now like to turn the conference over to Irmina Blaszczyk.

Please go ahead.

Thank you.

Good afternoon, everyone, and thank you for joining us on SPS Commerce's Fourth Quarter and Full Year 2018 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.

2018 marks a year of continued execution for SPS Commerce.

We delivered on our strategic goals and financial targets as we focused on delivering increased profitability and expanded margins, while posting strong revenue growth.

We made 2 strategic acquisitions that strengthened our competitive positioning and we repurchased 290,000 shares at an average price of $68.56 per share.

For the full year, revenue grew 13% to $248.2 million and adjusted EBITDA grew 50% to $51.3 million.

Our focus on profitability resulted in adjusted EBITDA margins of 21%, up from just 13% just 2 years ago.

As retailers and suppliers continue on their journey to embrace e-commerce, SPS Commerce plays an integral role in providing cloud-based supply chain management solutions.

In 2018, we experienced a strong year of enablement campaigns with retailers and distributors across various industries.

Among others, we continue to evolve our relationship with Costco, onboarding new vendors to the Costco platform, fueling the growth of our retail network.

We ran a community enablement campaign with Walgreens' suppliers based on Walgreens' updated order management requirements to ensure new and existing vendors comply with rulebook enhancements and specifications.

We executed community enablement campaigns with Sprouts Farmers Market, which operates more than 300 grocery stores in 19 states; and Shamrock Foods Company, which specializes in the manufacturing and distribution of quality foods and related products.

Sprouts has experienced meaningful store growth and needed a scalable solution to standardize all vendor onboarding and order management.

They chose to engage with SPS Commerce and now leverage our community offering to rapidly enable vendors to align with Sprouts' focus of bringing farm-fresh produce and other healthy affordable items to each customer.

Shamrock came to SPS Commerce as they were facing growing complex compliance requirements and needed to standardize and increase order automation across their sizable vendor community.

Shamrock chose SPS's EDI solution for better inventory management, optimization of logistics and overall improvement in order management processing.

Circle Media, an electronics vendor, became a SPS Commerce customer to meet Walmart's EDI requirements.

As they scale their operations, they turned to SPS for our NetSuite fulfillment solution and our ability to integrate to Shopify, enabling a seamless automation with all of their trading partners.

Adding Shopify to the SPS Commerce platform aligns with our core service value of growing our network through strategic partnerships.

To meet our customers' needs of increasingly complex supply chain requirements, we've also added an API integration to ShipStation, the leading web-based shipping solution.

The ability to integrate to retailers and logistics providers strengthens SPS Commerce's competitive position.

It enhances our capabilities to support our customers' capacity to fulfill retailers' critical EDI requirements, such as advanced ship notice.

For ShipStation and SPS Commerce customers, this integration saves time and creates significant efficiencies in the order fulfillment cycle.

As mentioned earlier, we made 2 strategic acquisitions to continue expanding our capabilities.

We acquired EDI Admin, a provider of supply chain integration technology.

EDI Admin was a longtime partner of SPS Commerce, with a shared vision of helping trading partners work better together, with end-to-end automation and integration solutions.

We believe bringing this technology in-house accelerates our industry leadership by delivering additional automation capabilities for our products.

During the fourth quarter, we also acquired CovalentWorks, which further expands SPS's market leadership and fulfillment for small- to medium-size businesses.

CovalentWorks is known in the industry for its affordable and easy-to-use solutions and superior customer service.

The customers' products include web-based and integrated EDI solutions.

CovalentWorks will expand SPS's market leadership in helping small- and medium-sized businesses quickly and easily to meet their customers' electronic trading requirements.

With 2 acquisitions, technology enhancements and continued focus on strategic partnerships, SPS Commerce continues to scale its offering and extend its leadership.

We have over 80,000 customers and over 29,000 recurring revenue customers.

Over 25 -- over 2,400 customers now pay us more than $20,000 annually.

As a result of the strong enablement campaigns, fulfillment grew 16% year-over-year.

In 2018, our analytics solutions grew 1%.

And as we previously noted, we expect this business to continue growing at a slower rate due to changes in the retail environment.

In summary, we believe that cost of inefficient vendor onboarding will continue to drive demand for efficient and affordable solutions.

SPS Commerce provides easy EDI and API integrations with trading partners across various industries, including retail giants like Costco, Amazon and Walmart.

Our strength is powered by our retail relationships and our deep expertise in trading partner connections, with over 80,000 customers worldwide.

We're excited to welcome the talented teams at EDI Admin and CovalentWorks to SPS Commerce, and would also like to thank all SPS Commerce employees and customers for their continued dedication and commitment.

With that, I'll turn it over to Kim to discuss our financial results.

Thanks, Archie.

We had a great fourth quarter.

Revenue for the quarter was $65.1 million, a 12% increase over Q4 of last year and represented our 72nd consecutive quarter of revenue growth.

Recurring revenue this quarter grew 13% year-over-year.

Adjusted EBITDA increased 50% in the quarter to $13.9 million.

For the year, revenue was $248.2 million, a 13% increase and recurring revenue also grew 13%.

The total number of recurring revenue customers increased 14% year-over-year to approximately 29,300 and wallet share increased 4%.

Excluding the acquisition of CovalentWorks, customer count grew approximately 5% for the year and wallet share grew approximately 8% for the year.

Adjusted EBITDA grew 50% to $51.3 million.

We ended the year with total cash and investments of a $178 million.

Now turning to guidance.

For the first quarter of 2019, we expect revenue to be in the range of $65.8 million to $66.3 million.

For the full year, we expect revenue to be in the range of $273.7 million to $275.7 million, representing 10% to 11% growth over 2018.

For the first quarter of 2019, we expect adjusted EBITDA to be in the range of $15 million to $15.5 million.

For the full year, we expect adjusted EBITDA to be in the range of $62.5 million to $64 million, representing 22% to 25% growth over 2018.

For Q1 2019, we expect fully diluted earnings per share to be in the range of $0.24 to $0.26, with fully diluted weighted average shares outstanding of approximately 17.8 million shares.

We expect non-GAAP diluted earnings per share to be in the range of $0.50 to $0.52, with stock-based compensation expense of approximately $5.3 million, depreciation expense of approximately $2.5 million and amortization expense of approximately $1.3 million.

For the full year of 2019, we expect fully diluted earnings per share to be in the range of $1.23 to $1.29.

We expect fully diluted weighted average shares outstanding of approximately 18 million shares.

We expect non-GAAP diluted earnings per share to be in the range of $2.03 to $2.09, with stock-based compensation expense of approximately $15.5 million.

We expect depreciation expense of approximately $10.8 million.

We expect amortization expense for the year to be approximately $5 million.

For the year, you should model approximately 30% effective tax rate, calculated on GAAP pretax net earnings.

Beyond 2019, we expect to see continued margin expansion, with a long-term target model for adjusted EBITDA margin of 35%.

And we remain confident in our ability to achieve a revenue run rate of at least $300 million exiting 2020.

In summary, we delivered strong adjusted EBITDA growth, while continuing to invest for the future through strategic acquisitions and enhancements to our industry-leading solutions.

With that, I'd like to open the call up to questions.

(Operator Instructions) Our first question comes from the line of Matt Pfau with William Blair.

Kim, maybe you could give us some numbers on where you ended the year in terms of quota-carrying sales reps versus where you started?

And just perhaps an update, as you plan for 2019, what you're expecting for your investment in sales and marketing and sales headcount over this year?

Sure.

So as you may recall, we made some pretty major changes to the sales organization going back -- actually starting back in 2017.

You may also recall that, that put us in a good position entering 2018, that we felt like we had the appropriate capacity.

So as it relates to quantity of sales reps, we stopped giving that number over a year ago, because we really think the capacity or the output is more relevant at this point.

So the way I would characterize 2018 is we had the appropriate capacity for us to achieve our 2018 expectations, and our 2019 guidance reflects the appropriate amount of capacity for us to hit our 2019 expectations as it relates to sales personnel.

Okay, got it.

And then just last one for me.

On the guidance for 2019, if I take out CovalentWorks, I think we're looking at an organic growth rate that's more in the 9% range.

Is that correct?

And it'd be a little bit of a step down from 2018.

So if that is correct, what would be driving that step down into '19?

Sure.

So 2 things to think about.

As it relates to the guidance for 2019, first, we believe that retail is still on a multiyear journey as they're really reinventing themselves to really focus on embracing omnichannel.

As such, our guidance reflects the expectations that, again, this is a multiyear journey that retailers are on.

As it relates to CovalentWorks, the -- those dollars are incorporated within our overall guidance for 2019.

But when we had a discussion right after we announced the acquisition of CovalentWorks, we had mentioned that the expectation in 2019 was revenue of around $4.5 million and EBITDA of about $1 million and that has been reflected within our guidance.

And our next question comes from the line of Scott Berg with Needham.

Two questions for me, Archie.

Why don't we start off with your fulfillment business.

It grew 16% year-over-year, and you grew your customers 5% year-over-year organically versus a plus, I think, 3.8% number in 2017.

So that environment seems to be, I think, better than a lot of us expected a year ago, and we had positive feedback off a recent conference about this space.

Why does this, 8 years later after your IPO, still seem like a good growth area?

So a couple of things.

One, I think the customer count was reflective of a strong year of enablement campaigns and that really drives customer count, at times it was a smaller count.

Fundamentally, we believe that the number of trading partner relationships continues to grow in retail, that we solve a real problem and that there is a very large total addressable market.

Clearly compared to legacy software, our solution set is superior.

So we think we have the best technology, the strongest network and really, an ability to execute for the suppliers and retailers as they navigate these tough waters.

Got it, helpful.

And then a follow-up question, Kim.

Your revenue outperformance this year on a quarterly basis, at least on an absolute basis, has been greater than what the company has historically done.

Is that a reflection of maybe some of these additional enablement campaigns and a slightly better environment than what you thought a year ago?

Or is there maybe a different dynamic that's helping drive that slightly better performance?

Sure.

So the quantity of those -- the enablement campaigns has been quite strong in 2018.

That is reflected within our results.

In Q4, there was a minor impact as it related to the CovalentWorks acquisition.

That impacted the numbers by about $150,000 in revenue in the quarter.

But the broader would be in line with what you had said, which is as it relates to the community enablement campaigns.

And our next question comes from the line of David Hynes with Canaccord.

Archie, I wanted to ask you about what type of engagement activity you had with the CovalentWorks customer base?

I mean, obviously, you guys can expose them to the breadth of your network.

I think for the most part, they were smaller suppliers.

So I'm curious if you had an opportunity to engage with those folks, and how you feel about the potential upsell opportunity there?

Yes, so I mean, we've had the acquisition for 60 days.

We have a plan, a transition plan, in place.

We have migrated a few dozen customers, and so it's still low numbers, with a bulk of them coming in the next 60, 90 days.

But so far, the reaction of those that have moved across has been very positive.

I think there's upsell capabilities.

It's never as fast as you'd like from the transition.

But one thing that's showing really nicely on these folks is that we do have clearly the best product in the marketplace.

And so when these customers are moved to the SPS platform, they are delighted by both the technology but also the service.

So it's been -- so far, it's been extremely strong.

Again, very, very early, but I expect it to be a very positive transition and a fairly seamless transition.

We're on plan and a little ahead, so we feel really good about it.

Good, excellent.

And then one for Kim.

Kim, I think this is the one quarter a year where you talk about, give us some metrics around channel contribution.

So curious if you could update any metrics there?

And how the channel is contributing to the business?

Sure.

Channels sales are pretty similar, so approximately 20% of the new business came from channel sales.

So that continues to be a nice solid contributor.

The largest remains, as you would expect as it relates to retailer and the community enablement campaigns.

But as it relates to channel sales, still quite strong, again, about 20% of the new business.

And fair to assume that those are multiples the size of kind of the typical deal that would come through an enablement campaign?

Sure.

So the one stat that we updated, we said we now have over 2,400 customers that pay us more than $20,000 annually.

For a point of reference, last year, that number was over 2,100.

So you'll see that correlates to -- that increase is highly correlated to, obviously, the activity that we have on the channel sales side.

And our next question comes from the line of Tom Roderick with Stifel.

So Archie, given that you've kind of been spending a lot more time on M&A, you've tucked 2 similar businesses into your back pocket, just in the last quarter alone.

Love to hear a little bit more about how much of your time you're spending on M&A?

And how you think about the opportunities as you look out there, what kind of -- what gets through your filter?

What are you looking for as you go forward, and do you see a lot more in the way of consolidation opportunities in this space?

Yes, I'm spending -- it's hard to quantify, but a significant amount of my time out in the marketplace talking to either prospective acquisitions.

I would say, Tom, what we look for is very similar to what we've looked for the 8 -- last 8 years.

Essentially, we think we have a great story.

We'd like to keep the story the same.

We'd like to advance the story.

So we're looking for retail-focused businesses that are focused on trading partner relationships and then our software-as-a-service.

We believe in moving from software to software-as-a-service

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And we're looking at retail and related spaces.

We think there is opportunity out there.

When we look at it, we're going to continue to be disciplined.

So we're only going to buy companies that are -- will help the long-term benefit of the company, not just short-term.

And that we can pay appropriately for.

So we're going to keep that discipline, but hopefully, we can do more.

And when you look at CovalentWorks, pretty good example here, right?

2,000 customers.

This may or may not be true, but it seems like one of the great advantages of acquiring their 2,000 customers, eventually, you can put them over onto your platform and offer more and more capabilities what you guys have.

Kind of take us through how you think about what the right time frame is to do that, and how difficult it is to do that when you look at 2,000 customers.

Is that a big challenge?

Is that something you feel well and adequately staffed to do today?

Would love to hear a little bit more about some of the transition plan as you bring on some more of these acquisition targets.

Yes, there's different components of the migration.

The first is just the connectivity to the retailer.

That is a very quick process, that will be done by March 31, that's the VAN, AS2, et cetera.

And frankly, we're -- from a product standpoint, we're world-class, so that's really easy for us.

I wouldn't say it's easy, because the people listening -- from our team are listening, saying, "Boy, that was a lot of work." But they do it very, very well.

And then depending on the customer, the customer to the extent they're not integrated back -- into their back-end system, which is the majority of CovalentWorks, we can move them fairly efficiently.

For perspective, in early 2017, I think I have my dates right, we moved 22,000 customers onto our new platform that we rolled out at that time frame.

We did that over a 6-month period of time.

Now that was a year of planning on that, but we'll get through that in 2019, and it'll be a bell curve, with more of it done early.

As you get into the integrated customers, there has to be a need or whatnot for them to do that.

Once they have a desire to do that, we can do that relatively efficiently, but not as efficiently.

Again, one of the nice things about moving customers over is the reaction has been that we have a great product.

And so we have typically seen delighted customers when they see the new product that they're going to be using is easy-to-use, quick, reliable, responsive, intuitive, the network's already there to every trading partner they probably desire to work with.

So we expect this to be a fairly seamless process.

Outstanding.

Kim, quick one for you.

I know you don't guide to cash flows from ops or free cash flow, but you had a tremendous year this year on both of those metrics.

As we think about next year, is that a pretty good proxy to use that growth in EBITDA as sort of a similar sort of growth rate for cash flow from ops?

Or would you suggest that there was any sort of onetime effects that benefited 2018 here?

Sure.

I think you can use that as a pretty good proxy.

On things underneath that, when you think about sort of CapEx, that tends to be in sort of 5-ish, 5% to 6% of revenue, but that's more on the free cash flow side.

So typically, you can look at that change happening in EBITDA and see how that flows through from a cash flow perspective.

And our next question comes from the line of Pat Walravens with JMP Securities.

So Archie and Kim, I know you guys are very happy with the current plan, how you are executing against it.

So I get that SPS Commerce is not interested in this.

But that being said, there is a ton of private equity activity in the software space over the last few weeks.

And so I'm just wondering, within sort of retail or supply chain, do you run into these firms when you're looking at acquisition targets and what sorts of strategies are you seeing?

And how might that affect the competitive dynamics?

Sorry for the multipart.

Yes, for the most part, we're not Pat, just because of the size of the acquisitions we're doing.

It's a whole different dynamic to go out and buy a CovalentWorks for $20-some million than where the real money is pouring in at the higher end.

So we're seeing some lower-end private equity firms in these deals, but it's -- the dynamics of the companies we're looking at are such that for the most part, we're not.

Some on the higher end, but -- so it's mixed but not a ton, not to the same extent that you'd expect.

Do you think it comes to sort of supply chain and trading partner integration in general?

I feel like this is a sector of the software market that was really big, 20 years ago, right?

And then has gotten more quiet and maybe people view it as an opportunity.

You know, I don't know.

I really don't.

Okay.

And so my follow-up is, Kim, when you look at your guidance for this year, how do we think about what's going on in terms of analytics versus fulfillment?

Sure.

So in 2018, you saw our overall growth for the year was 13% and then the mix of that, the fulfillment was a higher growth and the analytics was a lower growth.

So just as a reminder, it was sort of 16% and 1%.

So our expectations are as retail is in a -- we characterize it as sort of a multiyear state of transition or a multiyear journey, we expect that analytics will continue to be a much smaller grower then the fulfillment side in that mix.

We feel very good about long term as it relates to analytics.

But as retailers are on this multiyear journey, our expectation is that analytics remains much lower, right, from a growth rate, as the focus really is on the fulfillment first with retailers and then analytics, second.

Okay.

And then lastly, so since you put this plan in, I guess, Q4 '17, my message has been don't expect to see revenue acceleration out of SPS Commerce.

Would you agree with that?

Yes, I think you're in a spot where there's still a lot of uncertainty, and we're going to control what we can control.

We still think we can have strong growth, but I don't think we're going to have -- I don't think people should be expecting accelerated growth.

And our next question comes from the line of Jason Celino with KeyBanc Capital Markets.

Actually, I had a follow-up on the analytics business.

Just as a reminder, I don't know if you gave this stat out, but how much of the analytics revenue is a percentage of recurring revenue these days?

So it's in the teens, mid-teens percent of recurring revenue, and then the year-over-year growth is about 1%.

Okay, great.

And you guys did have a pretty good turnaround.

I mean, that's reflected in the kind of performance you did last year.

I'm wondering if you are able to share an updated maybe customer churn metric or a dollar churn metric?

Sure.

There's really no change from the last few quarters, the churn is around 13% and the dollar churn is a little bit more than half of that.

So closer to sort of that 7-ish percent.

Okay, great.

And actually one for, kind of, Archie a little bit.

As we look at some of the companies you mentioned at beginning of the script, Costco, Walgreens, Sprouts, I would characterize these as maybe not necessarily grocers, but quasi-grocers.

I mean, what areas of strength are also -- that you're seeing maybe outside of these areas?

You know, I would say that if you look underneath the covers of our business, it probably looks a little bit like the overall retail.

Obviously, grocery is a very, very large part of overall retail, so you'd expect a fair amount of grocery.

You'd expect sporting goods is great, hard lines is good.

The -- so e-commerce, pure e-commerce is good.

So it's more reflective of the overall marketplace.

And our next question comes from the line of Tim Klasell with Northland Securities.

Just 2 quick questions here.

First on CovalentWorks, obviously, you mentioned how delighted the customers are with your -- sort of the new platform that's available to them.

How far along are you on migrating that customer base over?

Is it sort of tracking as you would expect and going relatively smoothly and gives you greater confidence in maybe the next opportunity?

Or is it taking a bit longer?

Yes, we're very, very early, we're 60 days.

And so if you think about any big plan, there's a plan that's jointly done with the new SPS Commerce, former CovalentWorks customers, and analysis, a deep dive into each customer and then a plan set out.

So you have a 12-month plan with 30 to 60 days of planning, so we're just starting to -- the harder heavy lifting of execution.

So we're very, very early, but I -- the touch points that we have are very positive, and the thing that gives us confidence is about 2 years ago, we migrated 22,000 customers to this new platform and there was very strong positive customer reaction.

Okay, very helpful.

And then going back to your -- you mentioned in your prepared remarks about the ShipStation relationship.

How is that progressing?

Could we see more like that?

That's maybe a little bit more of a one-off on the shipping side.

Is there more opportunity out there for things like that?

And is it meaningful to the numbers?

I think, when I look at the numbers, it's all a little bit helpful.

No home runs, but our business model is such that every little bit helps.

If you can add some more value to your customers and at the same time get some more revenue, then we'll continue to look at.

I think there's, over the next 2 to 3 years, you'll continue to see more of these opportunities.

Again, from our customer standpoint, it's a huge win and then we get a little bit extra revenue off each customer that takes that up.

And our next question comes from the line of Koji Ikeda from Oppenheimer.

I had a question here on the recurring revenue customer metric, 29,300 recurring customers at the end of the fourth quarter.

Pretty big net addition there, a tad over 2,400.

I assume CovalentWorks is included in there, but even after stripping out those 2,000, that still leaves 400 net new adds there.

And that's a pretty good number.

Just anything to point out on community enablement programs in the fourth quarter?

And just thinking about community enablement programs going into 2,000, how is that pipeline shaping out for you?

Sure.

So community enablement campaigns were strong in general in 2018.

Specific to Q4, the Covalent number was just a little bit over 2,100.

So we added approximately 300 in the quarter, which is, I would say, sort of a typical type amount that you would see in Q4.

So we certainly had enablement campaigns in the quarter, but not as many as in some of the previous quarters.

Typically Q4, although of course we have them, that tends to be a little bit lower than in other quarters, just because of the holiday season in nature.

Got it.

Super helpful.

And then I guess, this question is either for Archie or Kim, just thinking about adjusted EBITDA margin expansion trends here, it expanded over 500 basis points in 2018.

And looking at the guide, it was like about 175-ish basis points of expansion in 2019.

I mean, what's the right way to think about the levers that can be pulled in 2019, and really beyond 2019, for EBITDA margin expansion trends as you work your way towards that long-term 35% margin target?

Sure.

So in '18, to your point, you saw a really significant amount, almost 500 basis points of EBITDA margin expansion.

So that was pretty atypical from the amount.

Now a big chunk of that, candidly, was benefit we got based on investment we had made in the sales organization the prior 2 years.

So the way you should think about it, you see the expectations for '19, which does reflect margin expansion.

The way you should think about it is that we're a company that will continue to deliver margin expansion, until we get to sort of our long-term expectation, which is in the mid-30s.

So I think the 2019 margin expansion is a more typical annual amount, and '18 was more atypical because we were able to benefit more significantly in that year based on investments that had been made the couple of years prior.

And our next question comes from the line of Mark Schappel with Benchmark.

Most of my questions have been answered, but just a few short ones here.

Kim, is it fair to assume that the revenue from EDI Admin and CovalentWorks was immaterial in the quarter?

Yes, so when we had provided our expectations for Q4, EDI Admin would have been factored into that, because of the timing of when that acquisition was and it's not -- was not material.

Covalent would not have been in our Q4 guidance, because the timing of that acquisition actually was mid-December.

Still, very small immaterial amount, but that amount was approximately $150,000 for the quarter.

Okay, great.

And then Archie, haven't heard too much about the international business of late.

Just wondered if you could just give us an update on what you're seeing there, specifically in Australia?

Yes, I was actually just in Australia.

We -- that business is, I think, has a really good execution and has a lot of opportunity there, as retailers are starting to face many of the same challenges, and they have retailers at all stages of sophistication.

I was at one e-commerce-only retailer, and they do 3-hour shipping in the Sydney area.

So we think there's a real opportunity there.

It's still a relatively small business.

But theoretically, it should be about 10% of the size of the U.S., based on market share, and we think we're pretty well-positioned in Australia.

(Operator Instructions) And our next question comes from the line of David Gearhart with First Analysis.

Almost all my questions have been asked and answered, but I just wanted to ask you, in terms of the retail environment, you said in the past, some of the dynamics and puts and takes, that the kind of technology that SPS provides is somewhat down on the priority order list of these retailers.

Just wondering if it has directionally moved up in the last few quarters or so, and if there's any way, either by bolting-on technology -- on additional technologies, that you could actually move up on the priority curve with said retailers?

Yes, I would say it's relatively the same, as it has been over the last 2 to 8 quarters.

Having said that, each individual retailer is at a different spot.

So some of the retailers, we're top of the list, and hence, we get a deal from.

And so we're still seeing deals.

We had a very strong enablement campaign.

So we'll just continue working in the environment we have, and I think we'll continue to have success.

This concludes the question-and-answer session.

Ladies and gentlemen, thank you for participating in today's conference.

This does conclude today's program, and you may all disconnect.

Everyone, have a great day.