Good day, and thank you for standing by. Welcome to the Q1 2022 ChannelAdvisor Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to speaker today, Raiford Garrabrant, Head of Investor Relations. Please go ahead. Thank you, Victor, and good morning, everyone. Welcome to ChannelAdvisor's conference call for the Q1 of 2022. With me on the call today are David Spitz, ChannelAdvisor's Chief Executive Officer, Beth Segovia, ChannelAdvisor's Chief Operating Officer, and Rich Cornetta, ChannelAdvisor's Chief Financial Officer. This morning, we issued a press release with details on our Q1 2022 performance, as well as our outlook for the Q2 and full year 2022. This press release can be accessed on the investor relations section of our website at ir.channeladvisor.com. In addition, this call is being recorded and a replay will be available after the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized in the press release that we issued today. For a further discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our most recent Form 10-K, as well as our other filings, which are available on the SEC website at sec.gov. During the course of today's call, we will refer to certain non-GAAP financial measures, all of which are reconciled in the press release that we issued today. We also provide a GAAP to non-GAAP reconciliation schedule in our supplemental financial presentation posted on the investor relations section of our website. Finally, at times, in our prepared comments or responses to analyst questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. With that, let me turn the call over to David. Thank you, Raiford. We once again delivered strong financial results in the Q1, with revenue at the high end of our guidance range and adjusted EBITDA that exceeded the high end of our guidance range. Subscription revenue was particularly strong, increasing 17% year-on-year. This is a direct result of our brands focused strategy coupled with consistent, solid execution. I'd like to now share a few of the highlights that keep us bullish about our long-term prospects and confident that we can achieve our 2025 targets of $250 million in revenue and $50 million in adjusted EBITDA. First, our focus on brands continued to pay off, with Q1 revenue from brands up 32% year-on-year to 45% of our total revenue and an all-time high of 49% of our subscription revenue. We're fast approaching the tipping point where the majority of our revenues will come from brands. Because brands are generally stickier and offer greater potential for expansion, we believe the superior unit economics we've enjoyed with brands will continue to benefit our results as they grow to represent a higher percentage of our business. Second, our strong overall subscription revenue growth helped drive total revenue to the high end of our guidance range, despite slowing e-commerce growth and a more challenging macro environment as we move beyond COVID. We view this as a testament to the durability of our revenue model. Importantly, we expect our year-on-year revenue growth to bottom out in Q2 as we finish lapping those tough year-on-year comps in the quarter and expect stronger growth in the back half of the year as the comps ease. In fact, but for the significant strengthening of the dollar in recent weeks, we would have expected a return to double-digit growth in the back half of the year and for the full year. Third, we've continued to deliver strong value to our customers through ongoing investments in our platform. Our expanding breadth of supported channels has continued to differentiate us, and that's why we maintained our rapid pace of channel expansion in Q1, and we now support over 340 channels globally, including Saks, which I anticipate has the potential to be a significant channel for our customers. Long tail GMV in aggregate was again larger than eBay and Walmart for us, second only to Amazon, and grew much faster than all three. Additionally, Zalando, the fast-growing European marketplace you've heard us mention before, was our third-largest channel for the first time, surpassing Walmart. In addition, Beth will speak to some of the many product innovations we've recently rolled out. Fourth, cash generation remained strong in Q1, with cash up $6 million quarter on quarter to $107 million total. Our pristine and debt-free balance sheet and attractive returns on invested capital have allowed us to make significant investments while still delivering strong profitability and robust cash flows. Although we continue to evaluate opportunities to deploy our excess capital, we remain committed to a financially disciplined approach and focus on opportunities where we believe the potential returns align with our objectives. In closing, even as e-commerce growth rates normalize following a remarkable couple of years of pandemic-driven growth, our outlook remains strong, and we are well positioned to drive continued profitable growth. With that, I'll turn it over to Beth. Thank you, David, and good morning, everyone. Enabling brands to accelerate digital transformation and achieve their e-commerce objectives remains our priority, and we kept the momentum going in Q1. Coming off of a strong holiday season in Q4, we hit the ground running in 2022. To start, our account managers worked with our clients to update their specific plans for expansion and growth this year. Also, we recently conducted our semi-annual employee engagement survey. 84% of our staff participated, and we are so proud to say that employee satisfaction improved again to a record high in our company history and well above industry benchmarks. Finally, we delivered significant advancements in terms of product capabilities, access to channels, and industry leadership. Now I'd like to walk you through this in a little more detail. On the product innovation front, brands are actively seeking ways to streamline their e-commerce operations across the entire customer journey, whether it's how they promote their products, drive traffic to preferred retailers, or even how they process orders across channels. ChannelAdvisor's spring release gives them more ways to do that with an array of platform enhancements, partnerships, and integrations that will help brands scale and optimize their marketing, selling, and fulfillment operations all from a single interface. One of our top innovation priorities is to make it easier for our customers to reach more consumers by expanding our breadth of supported channels. Last year, we committed to adding at least 80 new integrations by mid-2022 compared to where we were at the end of 2020. As a result of terrific execution by the team, we exceeded that goal nearly six months early in January and are planning to add channels at a similar rate again in 2022. We got off to a fast start in Q1, adding integrations for 21 new marketplaces, including Walmart Mexico, Spartoo in 17 new European locales, Linio in Mexico and Chile, and another five locales for AliExpress, as well as two new first-party dropship connections with Douglas in Germany and Austria. With the addition of these new channels, ChannelAdvisor now provides our customers access to over 340 marketplaces and retail integrations. We also made it easier for brands to automate the creation of high-quality product content by adding support for Amazon Vendor content in 12 new locales, bringing the total to 19 third parties and 21 first-party locales. Success in multi-channel commerce relies on more than just having a listing on a given channel. Our strategy is to go deep on key channels and enable our clients to leverage native capabilities such as fulfillment and advertising. With our latest product release, ChannelAdvisor expands our fulfillment support by providing sellers the ability to manage and automate their fulfillment operations across additional channels, including bol.com and Wayfair. With these additional fulfillment integrations, sellers can deliver the best on-channel consumer experience while maintaining flexibility over fulfillment options based on product selection and inventory availability. On the advertising front, we recently established an API partnership with Criteo to expand retail media advertising opportunities for our customers. These capabilities should be available mid-year. ChannelAdvisor also released managed services for advertising on TikTok. TikTok is increasingly used by brands and retailers to reach new audiences. Continuous product innovations like these have contributed to cementing our position as the leading multi-channel commerce platform for e-com. Last quarter, we mentioned that we were named the number one channel management vendor by Digital Commerce 360 for the tenth consecutive year. This quarter, I'm pleased to say we again achieved Premier Partner status for 2022 in the Google Partners program under more exclusive criteria this year, joining a prestigious list that showcases the top 3% of Google partners in the U.S. As a Premier Partner, ChannelAdvisor has access to the training and insights needed to help brands drive long-term growth and stay ahead of the fast-changing e-commerce landscape. To see a case study that ties this all together, please visit our website to learn more about our customer, AJ Tack, a leading provider of high-quality equestrian tack, apparel, and home decor. Until May of 2020, AJ Tack was using the ChannelAdvisor platform to reach marketplaces like Amazon, Walmart, and eBay, while another firm managed its Google Ads. when a new ownership team came on board, they recognized the advantage of consolidating on one platform by utilizing ChannelAdvisor for both marketplaces and digital marketing. By working closely with a client strategy manager who focuses specifically on Google Ads, AJ Tack exceeded expectations with a 44% year-on-year increase in conversions for Q4 and an 85% revenue increase during the same quarter. They also leveraged ChannelAdvisor's repricing solutions that automatically respond to shifts in demand, noting that, quote, "Once we put the repricer in place, we saw results from it almost immediately." By partnering with ChannelAdvisor, AJ Tack captured the Amazon Buy Box more frequently. In their words, "If brands are selling on multiple platforms and need easy, one-stop-shop support, ChannelAdvisor is great." Our momentum in landing new brand customers was evidenced through the addition of new customers such as Perry Ellis, Inter Parfums, and Ste. Michelle Wine Estates, and as David mentioned earlier, our strategic partner, Saks. In terms of growing our business with existing customers, our account managers collaborated with our sales teams to sign expansions with customers like Lacoste, Epson, and Wolverine Worldwide. To summarize, our platform approach is resonating with brands. In Q1, we continued to build on the progress we made in 2021, and there are numerous initiatives underway to keep the momentum going. By empowering brands to reach new customers, promote their product offerings, and streamline operations globally, ChannelAdvisor continues to be well-positioned to capitalize on the positive long-term trends in our industry. With that, I'll pass it to Rich now to provide a more detailed update on our financial performance. Rich? Thanks, Beth, and good morning, everyone. We entered the Q1 of 2022 coming off a year of record top-line results, robust subscription revenue growth, and strong adjusted EBITDA and cash generation, driven by the strategic investments we have made over the past 18 months. Our outlook for Q1 anticipated continued strong subscription revenue growth in the mid-teens and also acknowledged some challenging year-over-year variable revenue comps that we expect to continue into Q2. I'm pleased to report that our results for the Q1 of 2022 came in better than expected, with revenue at the high end of the guidance range, subscription revenue growth of 17%, and adjusted EBITDA that exceeded the high end of the guidance range. At the same time, we continued to achieve strong cash generation and healthy margins, even with our growth investments. Let's get into the details for Q1. Total revenue reached $42.3 million in the Q1, up 8% year-over-year, driven by subscription revenue performance, which reached another record at $35.5 million and matched the 17% year-over-year growth rate achieved last year. Variable revenue of $6.8 million was in line with what we factored into our Q1 outlook. Revenue results associated with our brands cohort remained solid during Q1. We achieved total revenue of $18.8 million, up 32% year-over-year. More importantly, we realized record brand subscription revenue of $17.3 million during Q1, growing 36% over last year and representing 49% of our total subscription revenue, also a new record. This is up roughly 700 basis points from the prior year period. Brand customer count and average revenue per brand customer continued to increase throughout the quarter, and our strong revenue retention is driven by the strategic cohort of customers. Our fastest-growing revenue cohort continues to be customers with ARR greater than 100K, and these customers represent the majority of our ARR. Given all of these factors, we continue to expect that a majority of our revenue will come from brands by the end of 2022. Now moving on to Adjusted EBITDA. We finished Q1 at $8.2 million, well ahead of the high end of our outlook of $7.2 million, generating an Adjusted EBITDA margin of 19%. The Adjusted EBITDA overperformance was primarily driven by the pace of hiring, as well as the benefit from lease abandonment, which we'll continue to assess across our global footprint throughout the year. While still maintaining healthy margins, we remain biased towards growth, and operating expenses have been building steadily over the last year as we made strategic investments in our product and our services and sales organizations. As mentioned earlier, we had another terrific quarter of cash generation during Q1, with cash and cash equivalents reaching approximately $107 million and representing an increase of more than $6 million sequentially and $25 million year-over-year. Operating and free cash flow remained very healthy again in Q1, coming in at $7.9 million and $6 million respectively. We also saw deferred revenue increase again during Q1 to record levels of $6 million year-over-year. Now on to our financial outlook. For the Q2 of 2022, we're providing a revenue outlook range of between $42 and a half million and $43 million and adjusted EBITDA range of between $7.2 million and $7.6 million. As David mentioned earlier, the strengthening of the dollar over the last few weeks has had a meaningful impact on our financial outlook, lowering our year-over-year growth rate for Q2 by over 3 percentage points. With respect to subscription revenue, we expect continued strength in Q2, and our outlook reflects anticipated subscription revenue growth in the low to mid-teens. If not for the FX headwinds, our expected subscription revenue growth would be at least mid-teens. We anticipate variable revenue to decline year-over-year, similar to what we saw in the Q1, and primarily a result of the difficult comps due to stimulus-aided tailwinds a year ago, and because customers have been trading up to higher tiers over the past year, which benefits our subscription revenue. In addition, Amazon Prime Day was held in June of last year, driving higher variable revenue in Q2 2021. Despite the recent volatility we've seen in with respect to currency, we will provide a financial outlook for the remainder of the year. This is due to the good visibility we have with respect to subscription revenue, coupled with the normalization we expect to see for variable revenue in the back half of the year. We believe Q2 revenue growth will be the low point, even excluding the impact of FX, as we finally lap the effects of COVID and stimulus tailwinds from last year. For the full year, we target revenue to be in the range of $177 million-$180 million and adjusted EBITDA in the range of $37 million-$39 million. On a constant currency basis, our outlook would have resulted in a return to double-digit growth in the back half of the year as well as for the full year. We anticipate full year subscription revenue growth to be in the low- to mid-teens% on top of the significant subscription revenue growth rates achieved in 2021. On a constant currency basis, our expected subscription revenue growth outlook would be at least in the mid-teens%. In closing, our strategic focus remains with brands, and we are encouraged by the growth rates we have seen in subscription revenue. We will remain judicious with our cash on hand, and we will only pursue investments that supports our brand strategy and that we believe have the potential to provide an ROI that exceeds our weighted average cost of capital. We appreciate the continued support of all of our stakeholders. With that, operator, we'd like to now open the call to questions. As a reminder, to ask a question, you need to press star one on your telephone, and to withdraw your question, just press the pound key. Please bear with while we compile the Q&A roster. Our first question will come from the line of Colin Sebastian from Baird. Your line is open. Great. Thanks, and good morning, everybody. Have a couple of questions here. I guess first, maybe David, a little bit more on the macro environment. I think we've seen the spectrum from results thus far. Amazon has said there's been really no impact on their business. We've seen certainly other companies indicate there's been a strong headwind in Europe, if not globally. I was hoping you could kinda drill down on that a little bit. Is what you're seeing channel specific? What did you see from a linearity perspective during the quarter and through April? If you could provide a little more detail on that, and I have a follow-up. Thanks. Sure. Thanks, Colin. Obviously we saw moderation in GMV compared to you know in the middle of the pandemic. I'll remind everybody that last March we had I think the largest stimulus check in the U.S. you know that was issued during the pandemic. You know I've referred to those previously as Amazon stimulus checks because we can sort of see on our dashboards you know the day those things get sent out and deposited you know spike in GMV. We're comping against you know that in particular in March. What we saw from a trend perspective is probably the low water mark in terms of GMV was right around mid-March, mid to late March, coinciding with, you know, with last year's stimulus check, making that a tough comp. But we saw it creep back up towards the end of March and saw that trend continue in April. I think in large part, you're looking at a stimulus comp that, you know, that created a little bit of a bubble last year that obviously wasn't repeated this year. Beyond that, it's You know, I'm speculating, of course, but I think that inflation, you know, you'd have to be crazy to not think that that has some effect on consumer discretionary spending when gas is, you know, $4, $5, $6 a gallon, depending on where you live. I expect that that probably has weighed a little bit on discretionary spending as well. I would say the patterns were fairly consistent. I would not say that they were necessarily channel specific. If you look at our charts, you know, the things that I look at internally, all the lines sort of followed, you know, similar trajectories over the course of Q1 and into April. Great. That's helpful. I wanna drill down a little bit on the brand subscription ARPU or ARPC, the sort of ongoing increase there. Can you kinda walk through the drivers of that increase and, you know, how high you think that could ultimately go, sort of on an apples-to-apples basis? I'll give you some qualitative assessment, and Rich, if you've got something to add. Sure. Feel free to join in. You know, one of the nice things about brands is that they can really use the entirety of our platform, right? Obviously, we're best known for our marketplace integrations, but we also offer first-party drop ship, digital marketing, retail media, shelf analytics, Shoppable Media, right? We have a wide range of capabilities. 99 times out of 100, when we initiate a relationship with a brand, they are starting with one particular solution because they're trying to solve an acute need. Over time, they see lots of opportunity to expand with us. They could be adding additional products, they could be expanding channels, they could be growing into other geographies. Many of the brand customers we work with actually have a multitude of brands, so we might start with one, you know, one product line and then expand into other product lines. All of those things contribute to, you know, to a pretty significant expansion opportunity with brands. One of the things that we said at our Analyst Day is that we felt that just on our existing customer base alone, we could roughly quintuple our revenue. Meaning at the time that we did our Analyst Day, I think we were at about $50 million in revenue from brands, and we felt the addressable market or share of wallet within our brand customers that we already had was at least $250 million. Obviously we're also focused on adding additional logos as time progresses, but the expansion opportunity with brands is pretty significant and remains an important focus for us. The only thing I'll add there, Colin, is, you know, I mentioned in our prepared remarks that the fastest growing revenue cohort are customers with ARR greater than $100K, and that's driven by our brands focus. Just to put some numbers behind that, you know, how our focus on brands, customers there. Also with regards to net revenue retention, you know, we mentioned at Analyst Day over 100%, again, driven by our brands focus there. Just to put some numbers behind David's statements. Thanks. Just to clarify, beyond sort of the size of the brand, in terms of monetization growth or pricing, is part of the expectation that you'll be able to drive higher pricing, as brands are adopting more of these services? Yeah. You know, there's a few different ways we can grow, right? If they're adding additional products from our platform or expanding to new geographies or additional product lines that they have, certainly we, you know, those come at a price, right? We charge for those various services. Of course, I neglected to mention that just growth itself. As brands join our platform and they sell more and they grow GMV, that's also another growth factor for us. Yeah, in virtually all cases, there's an opportunity to monetize that expansion, which is why you're seeing that expansion in, you know, a significant contributor to the expansion of subscription revenue we have with brands. Thank you. One other thing to add there also is that our brands' customers tend to be more managed customers. That also is a driver of higher average revenue per customer. They're utilizing our e-commerce experts every day to advance their e-commerce objectives, and they pay a premium for that. Thanks. Our next question will come from the line of Zach Cummins from B. Riley Securities. Your line is open. Yeah. Hi, good morning. Thanks for taking my questions. First one for me. Rich, can you talk about some of the currency assumptions you're making here in the Q2 guidance and kind of what's being baked into that full year outlook as well? Yeah. It's pretty remarkable what we've seen just in the last 2 weeks for that matter. We had updated our forecast a couple weeks ago and made a few adjustments more recently, and it was really surprising to us how much of an impact it had on Q2, let alone the rest of the year. You know, we mentioned in Q2 roughly a 3% impact, which essentially, if not for FX, we would be right in line with consensus, current consensus for Q2. For the remainder of the year, you know, we could see anywhere between 4%-5% impact as a result of FX. That's what's baked into our current model. Understood. That's helpful. In terms of the investments, I know for the last probably year plus, you've really been working to build out kind of the sales force and then investing in new product innovations. Can you talk about where you're at with the sales force at this juncture in terms of having enough I guess quota carrying capacity to be able to sufficiently meet the demand that's in front of you? Yeah, hey Zach, this is David. We came into the year, you may recall, with a bit of a gap there on sales capacity, and we've worked really hard over the course of the last four months to address that. I would say we are very close to completely closing the gap. We're actually trying to hire to our year-end target. We're just a few headcounts short of that, and I anticipate that by the end of Q2 we should have that fully resolved and hopefully with a little bit of luck, maybe actually overhire a little bit to create some bench. We made strong progress in the quarter and into April on that front. Understood. That's helpful. Final question, geared towards Beth. Can you talk a little bit about, I guess, the marketplace expansion strategy? It seems to be pacing well ahead of expectations from the initial targets that were put out there. I mean, has there been any sort of key theme in terms of specific regions or specific marketplaces that a majority of your brands customers have been interested in breaking into? Thanks for the question. I think it's a good one. I think, you know, you're right on the money in that we focus on what our clients are looking to do in terms of expansion. There's still quite a bit of opportunity across Europe as well as a lot of emerging opportunity in Asia Pacific. I would say the expansion efforts have certainly been weighted strongly in those regions. We've certainly added channels in the United States and continue to do so, but the majority of our activity over the last year has been really focused on European and Asia Pacific marketplaces. Integrations, we've also seen a lot of activity in the 1P space, which has driven a lot of connections. Beyond that, you know, we have a wide variety of customers, and they're focused on a number of different things, and that's what's pretty cool actually about marketplaces, is they're focused on specific areas or specific product categories. You know, we just tend to focus on where the market is going in terms of new and emerging marketplaces and where customers are trying to reach more consumers. Got it. That's helpful. Well, thanks for taking my questions, and best of luck with the rest of the quarter. Thanks, Zach. Our next question comes from the line of Matt Pfau with William Blair. Your line is open. Great. Thanks for taking my questions, guys. Just wanted to ask on, you know, in terms of the demand environment. Obviously there's some impact here on the variable revenue from the GMV front, but in terms of what you're seeing with bookings relative to either new customers or expansions with existing customers, is that impacted at all by, you know, some of the normalization of e-commerce, or how has that continued the momentum that you guys have been seeing? Hey, Matt. Yeah, I think the demand environment remains strong. You know, obviously during COVID, there were a number of companies that you know, went into high gear in terms of their digital transformation, and that was helpful to us. There are many companies that you know, are finally getting to the point where they can address these things, right? They spent the last year or two kind of more in triage mode, where they were dealing with either supply chain or fulfillment or staffing. You know, all those kinds of things. I would say the demand environment remains strong. Got you. I think, you know, part of some of the initiatives Beth has done with her team is sort of being, you know, more strategic with some of the enterprise clients that you have and maybe sort of thinking about longer-term roadmaps that they have. Is any change in, I guess, what you're hearing from customers in terms of their longer-term plans relative to either marketplace expansion or e-commerce in general? I'll have Beth come on that, but I would say at a high level, I don't really see any change. I think, you know, nobody expected e-commerce growth rates during COVID to continue, you know, indefinitely. Trees don't grow to the sky per se. Everybody understands the continuously increasing importance of e-commerce, the probability that it's got a lot of room to grow in terms of share of wallet. It's not just the growth of e-commerce for brands, it's also about their transformation to get closer to the consumer. You know, if we look at other instructive industries like, just look at the media industry, right? Nobody's placing bets on Blockbuster Video anymore, right? It's all about content owners getting closer to the consumer. You know, it's The Internet has a way of compressing the distance between producers and consumers. In e-commerce, it's really not any different. Brands who have proprietary product recognize that the path to the consumer is shifting rapidly and in many cases means they have to get closer to how they reach that consumer. That's the long-term kind of fundamental, you know, secular dynamic that is changing a lot of behavior on top of just the overall long-term growth of e-commerce. Beth, I don't know if you had anything you wanna add just around sort of the customer commentary or the roadmap. Yeah. I mean, I would say steady as she goes, right? We certainly saw an acceleration of interest and activity and commitment from brands as they realized the digital transformation just needed to move more quickly. I would say, you know, these efforts are tremendous and time-consuming. You know, as brands look to grow their direct-to-consumer businesses, expand on marketplaces, build out their fulfillment capabilities, these things take time. And depending on their global footprint and how many countries they wanna do that with and how many brands, it takes a consistent and steady effort. While significant progress was made last year, and we've expanded channels to meet and lead that demand, you know, there's much more progress that has yet to be made. We are continuing to invest in our enterprise level of service. We're continuing to apply those new resources to enable those customers to execute those expansion plans. As I mentioned, you know, every year we go through an annual planning exercise, and we really focus on, so what are we doing this year, and what's the quarter-by-quarter plan, and how many new channels are we gonna bring on board? We are in execution mode, and I would expect that's gonna go on for, you know, multiple years with our existing clients, and then as we acquire new logos, we'll start the process again with them. Great. Just one more from me on the Commerce Network, maybe just an update on those efforts and what you're seeing there. Sure. I'll take that one. The Commerce Network is going well. We have. You know, that's our capability that brings both sides of our networks together. It gives our partners an opportunity to log into our software, you know, on a regular basis to seek out and find new retail and brand sellers to bring to market. It also, you know, enables our customers, obviously, to find more channels to go to market on. This network creates a matchmaking opportunity and expansion opportunity for both sides of that network. I would say we've seen steady engagement. We saw some very nice engagement as we went through Q1. You know, as the heat of Q4 and execution sort of, you know, died down a little bit and our customers and our partners started focusing on the plans for the year, we saw a lot of profile sharing and a lot of engagement happening. We've seen an uptick in our partner profile creation and sharing. I think it's a steady as she goes. We are nurturing the platform. We're continuing to plan for and release new capabilities throughout this year, and the roadmap goes into next year as well. You'll hear us talk about it more as we give you updates in the future. It's going as planned. Thank you. Great. Thanks, guys. Appreciate it. Thanks, Matt. Once again, as a reminder, that's star one for questions, star one. Our next question will come from the line of Tom Forte from D.A. Davidson. You may begin. Great. Thank you for taking my questions. I have three. The first one, David, you talked about inflation at the e-commerce level. I'd like to know about inflation at the ChannelAdvisor level. How are you managing it, including labor inflation? Hey, Tom. Thanks. Yeah. We increased our merit increase for the year for our employees was significantly higher than we would normally do in a year. I believe it was more than 2x kind of a normal annual increase as we work to keep up with the market and make sure that we're you know we're being thoughtful and standing by our employees. That's been a part of it. We also kicked off a pricing increase at the beginning of Q2. We increased our price book. Obviously, that'll take time to work through our entire customer base. We view that as, you know, helping to offset, at least partially offset, some of the increases in wages that we've seen. Great. My second question, and I have one more after this one. I wanted to get your thoughts on the e-commerce industry on the impact for two items. One, discretionary spending returning to travel. Seen some companies talk about that. The second, Apple's emphasis on privacy affecting the efficacy of digital advertising. Yeah. I'll start with the second around privacy. I think that's a trend that's just gonna keep going, right? Whether it's pressure from Apple, maybe from Google and some of their app policies, and also on the regulatory front, right? I don't see an environment where privacy considerations don't get more stringent over time. For us, I think it's actually been a bit of a tailwind. We don't, you know, we don't use, you know, cross-channel cookies. We're not trying to track users across channels. What this has really done, in my view, is this has taken what has historically been kind of a duopoly between Facebook and Google and kind of cracked it open. Retail media is one of the fastest-growing segments for us. That's, you know, things like Amazon advertising or, you know, any of the advertising programs that exist across different retail sites. Our strategic partnership with Criteo is gonna help us attach to a much broader set of those. Privacy, I think is actually driving an intense desire to have more first-party data and creating an opportunity for these sites to monetize more directly. I think net-net, it's a benefit for us and probably causes continued ad dollar shift from, again, you know, some of the traditional behemoths to more dedicated sites. To your first question about inflation and discretionary spending and travel, you know, I'm not a macro economist, but, you know, I do think the consumer remains healthy. We're obviously in an uncertain environment as it relates to increases in interest rates, you know, what that does, and, you know, does the economy sort of have a soft landing or does it slow down abruptly? I saw that the jobs report just came out, and it was really pretty strong. That's probably a lagging indicator. You know, you're starting to see unprofitable companies and startups contemplate layoffs, so maybe that's the canary in the coal mine. As I said in response to an earlier question, I think it's hard to imagine that, with fuel prices the way they are, with you know, when you look at the basics, right, the necessities, food, fuel, energy, those costs have gone up pretty substantially. While I think the consumer is pretty strong, you know, you have to believe that has some impact on discretionary spending. Travel, I do think that there's a lot of pent-up demand to you know, to sort of get out of the house and go somewhere. Whether that's you know, a meaningful impact on discretionary spending, I don't know. You know, our view. The way we look at the rest of the year is that we think Q1 and at least the first part of Q2 are kind of the toughest comps, again, because of stimulus checks. A year ago, we had the Child Tax Credit that was going out on a monthly basis for a period of time, and that's going away, and you have inflation. We expect the comps to ease and for GMV growth to be moderate and sort of normalize in the back half of the year. We have Prime Day. That's another point, right? I think Rich in his comments that last year Prime Day was in Q2. This year it's scheduled for July, so that's Q3. That'll be a pretty interesting moment to see, you know, how Prime Day compares year-over-year. You know, we think the back half of the year looks a little bit more normal compared to the first half of the year. Tom, I'd just like to add. My third question, Bill. Tom, sorry to interrupt. Just one thing to add, you know, specific to financial modeling, when you mentioned travel, we are anticipating some increased travel in the back half of the year as well as in 2023, almost a return to previous levels. There's some additional expenses to be incurred, you know, as more economies open up and travel has become more acceptable, to factor that into your financial models. Excellent. All right. My third question is almost like a case study. David, you said something that I thought was remarkable on Zalando, that's now the number three spot ahead of Walmart. Is that because we've hit some sort of inflection point for e-commerce penetration for apparel in European markets, or is it because maybe Walmart's emphasizing grocery? If you were to step back, what's enabled Zalando to achieve the three spot on your GMV list? Yeah, I think it's probably a couple things. I think Walmart, during the course of the pandemic, you know, so all of these products, when you go to one of these sites, they're typically showing up as a result of some kind of search. I think Walmart shifted some of the emphasis towards first-party products, right? 'Cause if you think about what people were buying online, it tended to be, you know, consumer staples and stuff like that. I think, you know, most of our exposure is to marketplace, and I think there was a little bit of a shift towards 1P. That's another thing that I think we'll lap against, you know, in Q1 and Q2 that should dissipate from a year-on-year perspective. Putting that aside for a moment, I think Zalando. For those who aren't familiar, it's a European. They're based in Germany. It's a European fashion retailer or fashion marketplace. I think one of the things that Zalando has done very well that other marketplaces haven't necessarily done is they really work closely with the brands to help with storytelling. You know, it's not just like everybody gets the sort of same format, you know, one picture kind of transactional site. It's because it's so focused on fashion, it, you know, it really provides, you know, more of a storytelling type of environment. They've done a fantastic job rolling out, you know, fulfillment services and continue to, you know, establish themselves as. One of the things I've said in the past is that, you know, the way to compete in the space isn't necessarily to go and be the next big general merchandise marketplace. It's to go, you know, be a winner in a specific category because every category has different shopping characteristics. If you think about how automotive is, right? Automotive is very geared towards make, model, year, which we call fitment, and, you know, how-to videos and community. Fashion obviously is much more image and video-based, and so you can build sort of a category-specific experiences that are really compelling compared to sort of general merchandise marketplaces. I think Zalando's just frankly executed really well. We've had a great partnership with them. I know they view ChannelAdvisor as a strategic partner because we were able to bring those brands on not only quickly, but with a high quality integration that ultimately translates to a good consumer experience, which is important for everyone. We've enjoyed a very fruitful relationship with them, and I anticipate it'll continue to grow nicely for us. Great. Thanks, David. Thanks, Rich. Thanks, Beth. Thanks, Tom. Our final question will come from the line of Josh Reilly from Needham. Your line is open. Hey, guys. Thanks for taking my questions. Nice job on the execution here in the quarter in a challenging macro. I'm gonna throw another macro question out here. How much of a divergence in trends are you seeing between the U.S. and Europe and maybe the rest of the world since the war in Ukraine has started? Are you seeing Europe's slow e-commerce trends significantly faster than the U.S., or is it closer to parity? Yeah. It's an interesting question, and I actually have to go back and rerun some of my analysis because frankly, the biggest impact right now is, as Rich said, currency, right? We have fairly meaningful exposure to the British pound and to the euro. If you just look at a chart over the last couple weeks of April, you'll see that, you know, unusually rapid strengthening of the dollar compared to what you would normally see, you know, during most two- to three-week periods. We've seen that that's actually the biggest impact, and I need to go back and sort of reparse, neutralizing the effects of currency. I would say, you know, just from a demand perspective, we continue to see strong demand in Europe. I think a lot of that is predicated on a lot of the work we've done around product. Beth was alluding to, you know, some of the channel expansion opportunities that we've had and, you know, a good bit of that is based in Europe. Europe is more fragmented from an e-commerce perspective, so the more we sort of cover that fragmented space, the more attractive we are to those who wanna sell in Europe. Thus far, I would not say that. I can tell you that we've seen a meaningful decline and I suspect that once we adjust for currency, I would say it's actually a pretty strong area for us at this point. We don't have a significant exposure, at least directly, to Eastern Europe at this point. Most of our exposure is U.K., Germany, and then from there, probably, you know, France and Spain, Italy, maybe Netherlands. I don't think, at least from a direct standpoint, that we're seeing a meaningful impact at this point anyway. Got it. That's helpful. Then maybe just one on gross margin. Given the lower variable revenue here, how should we think about gross margin throughout the rest of the year? With products like Shoppable Media and Brand Analytics, which as we know, are not based on GMV offsetting the variable headwind to gross margin. You know, obviously some of the success we saw with our margins over the last couple of years and continue to see even further now was driven by variable revenue, and we said that most variable revenue falls right to the bottom line. You know, we continue to focus on things we can control, which is subscription revenue. Again, as I mentioned, 17% growth in Q1. There is no with regards to gross margin, we've made investments there in support of our customer base. You should expect some normalization in our COGS line and gross profit in the back half of the year as the investments start contributing to expansion opportunities with our brands customers base. But if you see over the last couple of quarters, there has been some deceleration in COGS or in gross margin. I'm sorry, gross in the COGS line. You know, I just think that there's a lot of opportunity there to expand our relationships with our customers through this investment, and we'll see some top line benefit in the future. Got it. Thanks, guys. Thanks, Josh. Thank you. There's not any further questions in the queue. I'd like to turn the call back over to Raiford for any closing remarks. Thanks, Victor. Thank you everyone for joining us today. We look forward to speaking with you again soon. This concludes today's conference call. Thank you for participating.