Welcome to the E2open earnings call for fiscal 3rd quarter 2023 conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Adam Rogers. You may begin. Good afternoon, everyone. At this time, I'd like to welcome you all to the E2open fiscal 3rd quarter 2023 earnings conference call. I am Adam Rogers, Head of Investor Relations here at E2open. Today's call will include recorded comments from our Chief Executive Officer, Michael Farlekas, followed by our Chief Financial Officer, Marje Armstrong. Then we'll open the call for a live Q&A session. A replay of this call will be available on our website. Information to access the replay is listed in today's press release, which is available at E2open.com in the Investor Relations section. Before we begin, I'd like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for our fiscal 4th quarter and full fiscal year 2023. These forward-looking statements are subject to known and unknown risks and uncertainties. E2open cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports, including our 10-Q or any applicable amendments, for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. Finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Also, during today's call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are included in today's earnings press release, which can be viewed and downloaded from our investor relations website. With that, we'll begin by turning the call over to our CEO, Michael Farlekas. Thank you, Adam. Thanks to everyone for joining our fiscal third quarter earnings call. We had a strong third quarter against the continued backdrop of a challenging macro environment. We exceeded our guidance for subscription revenue, our primary focus, while expanding profitability and free cash flow. We look forward to sharing our results with you and providing an update about our business. During the call, I'll discuss our third quarter highlights, how our clients are using our network and platform, and an update on the FY 23 strategic investment areas we discussed previously. Marje will cover the third quarter financial results in more detail. Lastly, we will open up the call for Q&A. Let's begin with the third quarter. We had a strong quarter. We exceeded our subscription revenue guidance, generating a record $135 million in subscription revenue, which represents 82% of our total revenue. We continue our track record of being highly profitable, delivering record adjusted EBITDA of over $56 million. This translates to a 34% EBITDA margin. The organic growth rate of subscription revenue, our primary focus, was over 10% for Q3 on a constant currency basis. In the nearly two years as a public company, we have consistently grown subscription and total revenue while maintaining very strong profitability. Our consistent subscription revenue growth in the double digits for the last six quarters is the result of our breadth of product offerings, the diversity of markets from an industry and geographic perspective, and the value our innovations unlock for our clients who leverage our mission-critical applications. Stated more simply, we have multiple ways of winning. Let me provide you with some examples of what I mean by multiple ways to win, illustrated by how our clients are using the platform and our network. We recently signed an expansive contract with global retail leader Hugo Boss. The agreement covers a range of our solutions, from supplier collaboration to logistics, providing end-to-end supply chain visibility and control. Specifically, Hugo Boss will leverage our network and applications to optimize and manage internal and outsourced manufacturing. The solution enables collaborative capacity and forecast visibility, a robust procure-to-pay solution, and agile transition management capabilities. This project will give them full visibility and significant reduced cycle times, ensuring exceptional on-time delivery, which are the key performance indicators for any fashion company. It's a significant new logo win and brought to us specifically because of the marketing investment we initiated earlier this year. Our network and product breadth were the primary factors in winning this large multi-year contract. On the other end of the industry spectrum, we also signed a contract that includes multiple solutions for a global agribusiness innovator. That contract, along with Hugo Boss, helps demonstrate that our end-to-end supply chain platform works well across a wide range of industries. Like all quarters, Q3 brought many go lives for new and existing clients, with a few I'd like to highlight. We recently went live with the phase I of Amazon Kuiper's satellite project, which will enable high-speed internet access to unserved and underserved parts of the world. We have been working with Kuiper for the past year to help them build their supply chain focused on manufacturing, collaboration, and planning. Cloud network leader, Extreme Networks, went live with E2open's Partner Performance Incentives application, paying to their distributors over $66 million using our application within the first week of go live. Our solutions are value add to the entire network, helping facilitate payments and rebates while offering greater pricing visibility. An international mining and metals company is using E2open for Global Trade Management. They now have a single platform for global regulation, a centralized product classification repository, automatic export and import controls on all shipments, and more, with eyes towards future logistics capabilities. One of the world's largest consumer goods companies went live on E2open and Maersk NeoNav platform, a collaborative next generation solution that offers complete logistics, visibility, control, and decision-making through the integration of all trading partners and data in one closed loop system. The system provides predictive visibility and traceability throughout the supply chain in real time. This project delivers on multiple strategic objectives for the company, a single operational process, a control of inventory, both upstream and downstream, reduced costs through purchase order collaboration, and increased customer service levels. In addition to new logo wins and expanding client opportunities, network innovation is also a strategic priority for us. In November, we introduced E2open's Carrier Marketplace as part of E2open's broader strategy to expand the network ecosystem. The Carrier Marketplace offers carrier partners and shippers powerful new capabilities, including access to more data that allows both carriers and shippers to make better proactive decisions. Over 8,000 carriers leverage this network today, and we believe our new marketplace will help unlock more value for the entire ecosystem. I'd like to update you on our progress against the stated strategic investment areas we laid out at the beginning of the year. Investing in sales and marketing, increasing brand awareness, and our work with strategic partners, and our initiative to build systems integrator ecosystems. We've seen good progress in our sales and marketing brand investments. As evidenced in top of funnel pipeline growth since initiating these investments, and as noted earlier, opportunities specifically generated by this investment that are now flowing through as new client wins. Our brand awareness metrics have dramatically improved as measured by share of voice, where we are now consistently number one or number two in share of voice for our cohorts. Even though our investments in this area have been relatively modest, we've seen great success. On the strategic partnership front, this work continues with both our strategic partners and building our integrator ecosystem. This is long-term work that does not happen overnight. That said, we are making solid progress in both areas and are hitting our internal marks. Both initiatives will have the effect of decoupling our services growth rate from our subscription growth rate, with our primary focus on growing subscription revenue. By enabling the SIs, such as our partners Accenture and KPMG, to build their own practice and business on our platform, we're unlocking the extraordinary influence and capacity these global partners bring to our business. This means that services will continue to decouple from subscriptions and be a shorter-term drag on overall growth by design to support long-term subscription revenue growth. Finally, I'd like to mention a few other corporate highlights. We continue to build on our ESG initiatives. E2open released its second annual environmental, social, and governance report in the third quarter. Our software can have an enormous effect by reducing the environmental impact of our clients as they produce, transport, and distribute their products. To this end, ESG is part of our roadmap development. As a company, E2open held an enterprise-wide employee giving campaign supporting Water For People. Water For People facilitates the development of clean water, improves sanitation and health and hygiene in nine countries across Latin America, Africa, and India. We ran this campaign through the end of 2022, and E2open provided matching donations to this amazing organization. Lastly, we were named the top enterprise SaaS solution of the year in the 2022 Best in Biz Awards, along with honors for most innovative SaaS solutions. E2open remains focused on our clients. We have multiple ways to win. Despite the macro environment, we continue to deliver consistent subscription revenue growth while being highly profitable. Our performance in Q3 and our outlook for the year are evidence of our focus on profitable growth and disciplined operations. This focus allows us to maintain our EBITDA and free cash flow targets, even while our total revenue expectations for the year have come down due to FX, economic, and business reasons that Marje will discuss in more detail. We delivered adjusted EBITDA margins of over 30% as reported for the last 7 quarters. E2open is a reliable growth company that generates high margins and significant free cash flow. We are a mission-critical software company with durable revenue, consistent growth, long tenure clients, and also highly profitable. We are laying the foundation to become the world's preeminent supply chain software company. We have work to do, but therein lies the opportunity, as we are clear on the mission and our strategic path forward. Lastly, I'd like to thank our nearly 4,000 team members for their continued work and dedication to excellence for our clients, our communities, and our company. Marje will now review our financial performance in greater detail. Marje. Thank you, Michael. Good afternoon, everyone. I hope everyone had a wonderful holiday season and a fantastic start to the new year. First, I wanted to thank the broader finance team at E2open. Your efforts to get us ready for earnings, working through the holidays are much appreciated. I'm incredibly proud of the stellar team around me. I'm looking forward to all that we can accomplish together in 2023. As Michael mentioned, we had another strong quarter. We're excited to share those results with you today. I will begin by reviewing our fiscal third quarter results. I will briefly touch on our progress integrating our recent acquisitions. I will finish with an update to our guidance. Thereafter, Michael and I will open the call for your questions. As a quick note, I will talk about our results on a non-GAAP basis. We show a reconciliation to GAAP measures in the press release, which is available in the investor relations section of our website at E2open.com. In the fiscal third quarter of 2023, we reported subscription revenue of $134.9 million, reflecting an organic revenue growth rate of 8.0% on a pro forma basis or 10.2% on a constant currency basis when adjusting for the -$2.7 million year-over-year impact from foreign exchange fluctuations. This was above the high end of our guidance range of $131 million-$134 million. In the first nine months of fiscal 2023, subscription organic revenue grew 11.0% on a pro forma constant currency basis. Delivering a consistent and predictable subscription revenue stream remains our core focus and is the foundation of our durable and highly profitable business. Professional services and other revenue were $30 million, reflecting an organic growth rate of -9.2% on a pro forma basis, or -6.6% on a constant currency basis when adjusting for a negative $900,000 year-over-year impact from foreign exchange fluctuations. We have a stated strategy to focus on durable, high-margin subscription revenue over services revenue. In addition, as Michael mentioned, and we have also discussed on our previous earnings call, we are strategically shifting our services revenues to new partnerships with system integrators as part of the planned expansion of our channel ecosystem in order to aid our future subscription revenue growth. Our services revenue is underperforming against our expectations while our services gross margins improved from Q2. We are focused on addressing two main key areas to turn services revenues back to growth. First, we mentioned last quarter that logistics, a business we acquired earlier this fiscal year, has been a drag on the services revenues due to free service hours as we transition certain clients to our cloud platform. We continue to address this issue and expect the trend to improve as we move into fiscal 2024. Second, there are some pockets of unmet-demand as we ramp trained employees and contractors to be fully billable. We're working to adjust the supply and demand balance of our team to better anticipate client needs by product, so we can more closely match the demand we see with the supply we have. Aside from these two items, there are also macro impacts beyond our control as select customers, especially in the technology space, are temporarily slowing or pausing larger transformation projects. We expect those impacts to normalize and the projects to be picked up again as the macro environment stabilizes. We expect our services revenues to return to being additive to our top-line growth profile as we work through the near-term issues over the next couple of quarters. We reported total revenue in the fiscal third quarter of $164.9 million, reflecting a total organic revenue year-over-year growth rate of 4.4% on a pro forma basis or 6.7% on a constant currency basis when adjusting for a negative $3.6 million year-over-year impact from foreign exchange fluctuations. In the first nine months of fiscal 2023, total organic revenue grew 8.9% on a pro forma constant currency basis. Our gross profit was $113.6 million in the fiscal third quarter, reflecting a 4.9% increase on a pro forma basis or 6.1% increase on a constant currency basis. Gross margin was 68.9% for the third quarter of fiscal 2023, compared to 68.6% in the comparable period in fiscal 2022, or 68.2% on a constant currency basis. I will now walk you through the supplemental slides we prepared to help bridge the year-over-year impacts to our gross margin. These slides are also posted to the investor relations section of e2open.com. As you can see, the first bar on the slide represents FX, which had an approximate $1 million negative year-over-year impact to our gross margin. The second bar shows strategic system integrator spend impact to gross margin, which was $2 million this quarter, but was not present in the year ago period. As mentioned earlier, we're building a global systems integrators ecosystem and have been investing in training staff and developing go-to-market capabilities with organizations such as KPMG and Accenture. This is part of the previously disclosed $20 million investment spend for fiscal year 2023. Net organic margin growth was a $7 million positive impact to our gross margin, primarily driven by higher subscription revenue. Adjusted EBITDA was $56.2 million compared to $46.0 million in the prior third quarter, an increase of 22.1%. Adjusted EBITDA margin was 34.1% or 32.6% on a constant currency basis for the third quarter of fiscal 2023, as compared to EBITDA margin of 29.1% during Q3 of fiscal 2022 on a pro forma basis. The next slide details the items impacting our third quarter fiscal 2023 EBITDA when compared to the year-ago period. FX was an approximately $1 million year-over-year benefit to our EBITDA line. As discussed during our previous earnings call, we have natural cost hedges to our largest top-line currency exposures, which are the euro and the pound, along with additional costs in other currencies. The second bar on this slide, investment spend, refers to the previously disclosed $20 million fiscal year 2023 investment in system integrator ecosystem, marketing and internal support for investment spend, which totals $6 million in the third quarter. Similar to our second quarter, approximately $2 million of the $6 million investment spend relates to the system integrators and therefore sits within our gross margin line. The balance of $4 million is part of OpEx and only impacts EBITDA. Net organic margin growth was $9 million positive impact to our adjusted EBITDA, primarily driven by gross margin improvement coupled with various OpEx cost-saving initiatives. Net income for the third quarter of fiscal 2023 was $5.5 million, and adjusted earnings per share was $0.06 on approximately 341.4 million adjusted basic shares outstanding. On to cash flow. I want to spend some time on this topic as generating compounding free cash flow growth is a core focus for us. As a supplement to the GAAP cash flow view, we have been providing an adjusted unlevered free cash flow view that starts with adjusted EBITDA and subtracts normalized CapEx. That is CapEx excluding one-time M&A spend. Adjusted unlevered free cash flow per that definition was $50.4 million for the third quarter and $132.4 million for the first nine months of fiscal 2023. Going forward, in order to provide a clearer view of our normalized cash flow, we will start with GAAP operating cash flow that already takes into account cash interest, net working capital, and cash taxes, as opposed to the previous view that started with adjusted EBITDA. We adjust the GAAP view for non-recurring one-time and M&A cash payments to derive an adjusted operating cash flow. Our adjusted operating cash flow for Q3 was $50.7 million, and for the first nine months of fiscal 2023 was $75.0 million. We will continue to provide the disclosures on normalized CapEx expenditures similar to what we have done in historical periods to derive adjusted free cash flow. Our adjusted free cash flow for Q3 was $44.9 million, and for the first nine months of fiscal 2023 was $51.4 million. This format should provide more clarity on operating cash flow generation, adjusting for non-recurring items, particularly given our historically acquisitive nature. We have included the year-to-date view in the supplemental slides this quarter, and we will be presenting it in our quarterly press release going forward. We will be retiring the old adjusted unlevered free cash flow view, but it can still be easily derived by taking our EBITDA minus the normalized CapEx figure that will still be provided in the adjusted cash flow walk. Timing differences of cash inflows and outflows can have a significant impact on quarterly cash flows as a normal course of business, which is why it is important to look at cash flow on a rolling basis, normalizing out quarterly fluctuations. As an example, for our Q3 cash flow, I would point out two items. First, it includes the catch up on delayed billings from Q2 BluJay Solutions ERP migration that depressed collections in that period. Second, Q3 cash interest payments were below normal run rate due to a timing shift of cash payments into Q4. As a result, we will see Q4 cash interest payments approximately $12 million above normal run rate. To reiterate, building a business that generates compounding cash flow is a core focus for us, and finding additional efficiencies and levers for cash flow growth generation will continue to be a priority for us. Now to provide a brief update on our recent acquisitions. We are complete with our integration of BluJay Solutions that closed on September 1, 2021. As mentioned last quarter, we surpassed our original synergy target of $25 million. Now turning to the logistics acquisition. Total synergies related to the recent logistics combination are still projected to be just over $10 million. We expect to action approximately 75% of run rate savings and realize 50%-60% of the run rate savings by the end of fiscal 2023. As previously discussed, the logistics systems integrations are taking slightly longer than expected. We remain excited about the long-term additive value of this acquisition and are confident in our ability to achieve the previously announced synergies. On to guidance. Our GAAP subscription revenue for fiscal 23 is now expected to be in the range of $533 million-$536 million, which includes an approximate $2 million positive FX impact compared to the last time we reported earnings as the euro and the British pound have incrementally strengthened against the dollar. We now expect an approximate $9 million negative headwind year-over-year from FX. Our subscription revenue organic constant currency year-over-year growth is expected to be in the range of 9.9%-10.5%. We are adjusting the lower end of our GAAP subscription revenue guidance on a constant currency basis down by $3 million and tightening the range to $3 million, representing a guidance range of $542 million-$545 million. As mentioned last quarter, we have seen delays in select large deal closings due to a volatile macro environment. While some of the deals delayed from Q2 did close in Q3, some are still delayed, and we're seeing a similar trend carrying through Q3 and Q4. We do expect those projects to be picked up again as the macro environment stabilizes in the coming quarters, as the demand for our mission-critical platform remains as strong as ever. Total GAAP revenue for fiscal 2023 is now expected to be in the range of $655 million-$660 million, including an approximate $2 million positive FX impact since the last time we reported. We now expect an approximate $12 million negative headwind year-over-year from FX. Our total revenue organic constant currency year-over-year growth is expected to be 8.2%-9.0%. On a constant currency basis, we're adjusting down the lower end of our guidance range by $14 million and tightening the range to $5 million. It is now expected to be in the range of $667 million-$672 million. Most of the revision is coming from the services revenue due to the headwinds outlined earlier. We continue to expect non-GAAP growth margin to be in the range of 68%-70%. We're also reaffirming our adjusted EBITDA guidance in the range of $217 million-$223 million. We're likely to come in at the low end of the EBITDA guidance for the year. We expect to still reach the EBITDA guidance established at the beginning of our fiscal year despite the headwinds to our revenue. We're able to do that due to our keen focus on the operational efficiency of our business, additionally supported by the way we have set up our business to provide natural FX hedges on the cost side that offset the FX headwinds to the top line. Despite the continued evaluation of our cost base, we're still continuing to invest in future growth of our business and committed to our previously announced strategic investment spend of approximately $20 million this year, which is included in our guidance range. Now to quickly touch on Q4 guidance. GAAP subscription revenue for the fiscal fourth quarter of 2023 is expected to be in the range of $137 million-$140 million, including a $2 million year-over-year FX headwind. This guidance range represents a 7.0%-9.3% year-over-year growth rate on a constant currency basis. In conclusion, we're proud of our year-to-date results and the trajectory we're on for the rest of the year. Our sales and marketing teams have done an incredible job navigating the ever-changing macro dynamics impacting our customers. We're also clear on the improvement opportunities internally and have a clear action plan that we're aligned on. We remain excited about the multiple growth opportunities in front of us and are committed to a balanced approach to growth and profitability, targeting compounding free cash flow growth as our North Star. Thank you everyone for joining us today. We look forward to finishing this year strong and updating you on our results and progress next quarter. With that, Michael and I would now like to take your questions. Operator, we're ready to begin the Q&A session. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Your first question is coming from Mark Schappel with Loop Capital. Please proceed with your question. Hi, good evening, and thank you for taking my question here. Hi, Mark. Mike, starting with you. Hey. I was wondering, just starting with you, if you could just provide some additional color, maybe some of the deal delays that were mentioned in the prepared remarks. You know, with respect to are you seeing them in certain verticals, it sounds like maybe high tech might be impacting things a little bit more than other verticals. Are you seeing it with like certain size customers, you know, larger versus smaller customers? Again, maybe just give us a little more color on the deal delays? Yeah. Any choppy environment, I think it skews a bit towards larger transactions, become harder to get over the finish line. Certainly, you know, all seen the news in high-tech, with the high-tech companies making, you know, pretty significant adjustments across the board. That, that's true, and we mentioned that specifically around our services. We have long-standing relationships with these companies, and sometimes they say, "Okay, we're gonna pause a little bit." That's kind of the primary reason for the services revenue, that and logistics we mentioned. It, it skews towards larger transactions, and it just takes a little longer for them to get over the finish line, that you'd see in kind of any, you know, choppy economic environment. Are you seeing any deals, actually go away, or are they just being delayed, purchase decisions just being delayed here? I think the deals don't really go away. You either win them, you lose them, or, you know, they get put off till some period in the future. You have to remember, the reason they put our software in is to fix things for the next 10 years. Many times they'll say, "Well, you know, not this quarter, we'll see what happens." I don't think they really go away. It's just that they get, you know, pushed off based on whatever their financial objectives are or whatever they can tackle at the pertinent time. We don't really see them going away kind of ever. Just a matter of do they push a little bit to the right. Okay, great. Then, with respect to linearity in the quarter, maybe just talk a little bit about any observations there. I mean, did you notice that was a slowdown, or the deal delays noticed later in the quarter? Was it pretty much even throughout? No, I think we had a strong start. I think the quarter was a fine quarter. It just, you know, we had a couple of things that got pushed a little bit. I wouldn't say there's anything kind of different happening than happened throughout the entire year. It's just a choppy macro environment as everybody can see. Okay, great. One final question, shifting gears a little bit here. Yeah. With respect to the company's capital structure, maybe you could just give us an update or just give us your, the firm's views on, say, M&A versus debt reduction versus share purchases and how we should think about that going forward? Yeah, thanks for the question. Obviously, you know, we've, as we said, you know, we've been able to build the business through, in a pretty aggressive period of M&A. You know, in the current environment, I think it's fair to say that that avenue for us is gonna be a little bit on pause for a while. You know, primarily because of the bid ask spreads are a little bit still not where we'd like them. We also have to be, you know, cognizant, Mark, of, you know, one, we have our leverage that is outside kind of our range and coming down, so we wanna make sure we get it back into the range we articulated early on. As you look at our cohorts, you know, we're undervalued, we think, in the marketplace, issuing shares at this point, wouldn't be right for us to do for ourselves and for our shareholders. I think overall, you know, build more business and generate free cash flow and, you know, mostly de-levering. Thanks. I'll pass it to the next person. Our next question is from Adam Hotchkiss with Goldman Sachs. Please proceed with your question. Great. Good afternoon, and thanks very much for the questions. First, would love to dig a little deeper on, where we are with your relationships with the system integrators. Sort of what has the initial feedback been from partners as a result of the investment programs? Then could you give us a sense for how you're thinking about what impact that partner ecosystem and some of these investments will likely have on subscription revenue ultimately at scale? Yeah, I think, listen, we've made great progress on, you know, the ones we've announced. As we dig in, we find, you know, more and more pockets of opportunity in other areas. I think we have continual relationships and conversations with them, and they're getting happening at increasingly higher levels in their organizations. You have to kinda keep in mind of how large these companies are, you know, especially when thinking about Accenture with, you know, nearly 1 million people working for them. It's gonna take a little bit of time, and it's gonna take time for us to kind of build, you know, on what we've started. We, this is necessary, we think, for us to become the company we desire to become. We also are very sober in terms of, you know, what it's gonna mean and the length of time. We've talked about this. This is a really a 24 into 25 kind of initiative. That's why we needed to make a fairly large jump-start to the investment, to kinda get things going. We're excited about it, seeing great progress, but this is not a short-term thing. This is something we're very highly committed to. Just to add to that, Adam, you know, as we look towards our next fiscal year, obviously, we're very focused on working on pipelines and really detailing out the plans, you know, together with our partners and, you know, just stay tuned and you'll hear more detail as we work through those plans for next year. Got it. No, that's super helpful. Thanks for that. Then just on net revenue retention, gross revenue retention, I know these are metrics that you tend to give out annually. you know, any material changes in those over the last quarter or so from where we were at the end of fiscal 2022 and any drivers of those changes, if any? No, I don't, I don't really see that much at all. Those numbers have been pretty consistent for us for a while. That's kind of the nature of our business is to retain these customers. We don't really see that changing in the short term, not a dramatic way one way or the other. I think, Adam, we've quantified previously that, you know, any quarter they can kind of fluctuate 100 basis points, you know, more or less one way or another, but nothing in terms of change from that prior disclosures or trends. Got it. Super helpful. Thank you. Then last one for me, just on the marketing investment. You noticed some outsized performance there. you know, any scenario that you could see, even in a difficult macro environment, to sort of amplify the brand, to lean in there in addition to what you've already laid out? you know, do you think the benefit from those investments, you know, has a little bit left to play out before you consider that? Yeah. We make investments in our branding and marketing all the time. You know, kind of like on the systems integrator, you know, we felt coming out, we needed to put a little more emphasis on it this year, which is why we think a lot of that's gonna be, you know, one time in nature. You know, one of the things that, you know, we brought in Kari a little over a year ago. You know, before that, we'd never had a CMO. You know, we have a capability now, and that's, you know, that wasn't part of this one-time investment. We are making marketing investments, and we continue to expect to be kind of one or two and share a voice and continue what we started. We don't really expect to replicate, you know, as much of a one-time spend next year. I don't think we need to, it'll, you know, morph back into kind of our normalized sales and marketing spend as a percent of revenue. Really helpful. Thanks, Michael. Thanks, Marje. Thanks, Adam. Our next question is from Chad Bennett with Craig-Hallum. Please proceed with your question. Great. Thanks for taking my questions. So just kinda digging a little bit more into kind of the deal delay commentary. You know, I think last quarter you were kinda specific to EU and I think you pointed out the tech vertical also last quarter. Just from a geo standpoint, are you seeing it, you know, in more than just the EU kind of, you know, from a geographic standpoint? It's, it's really situational. You know, it just depends on the company, what they have going on and, you know, what their approvals are. Like, you know, just like every company does when things are a bit uncertain is they kind of take a, you know, second, third look at things. It's situational. We have some deals that move. You know, we're selling a lot of software. Some deals move through quickly, and other ones that we'd expect to move through kinda get, you know, slowed down a little bit. I don't really think it's any, you know, in particular pocket. I think, obviously that the tech one is a little bit more concentrated, but we've all seen that, right? Everybody is making adjustments into their plans. you know, historically, we've been have a lot of longstanding tech, you know, clients and relationships. Okay. Just a follow-up on the SI progress you're seeing or are seeing right now. I think, again, you've talked about, at least for the second half of the year, SIs being, you know, roughly 25% of your pipeline for the balance of the year. Actually mentioned that you know, several large deals that you've received from them have actually accelerated or progressed through the pipeline faster than if you're direct. Is that the case in just considering everything that's going on in the world? When should we expect to see actual billings, bookings benefit from SIs that would, you know, actually move the needle towards acceleration on organic subscription growth? Yeah. I mean, many of the partners we have been partners in the past, and we've obviously are making investments to enhance and become bigger partners with them. Again, this takes time with these partners. You know, this investment we're making, again, is to jumpstart it. To get you know, way more involved and engaged with those companies across the board. We would see that coming in, you know, incrementally over time. You know, the way to think about our business is, you know, you're not gonna see a huge, you know, inflection point up for any one, two, or three things. All of these efforts we're doing, are really meant to, you know, leverage the fact that we have a very, you know, diversified product set, the world's best companies at scale, and increasingly a really large ecosystem of network providers and network customers, and then also, you know, integrators. All just going into the mix of incrementing our subscription revenue, which is our primary focus. That's kind of how we've kinda got here and what we continue to do. You'll see us on actually, you know, do this and other things as we go. Again, none of them are gonna inflect our business up dramatically. This is all just incremental- Yeah ... expansion of our subscription, growth at a very high, you know, margin. We've been extremely disciplined in terms of balancing our growth profile with our profitability. If you kind of look over the past, you know, 6, 7 quarters now, we've been. You know, have not taken the bait on trying to grow at all costs. We've not taken the bait at overinvesting in things that we don't think are super sustainable. We're highly focused on EBITDA. We're highly focused on free cash flow and highly focused on, you know, expanding our subscription revenue that comes in at, you know, high 70s kind of gross margin is extremely long term. So we're building a long-term business, and we're gonna stay focused on that. Okay. Just last one for me. It sounds like just from a messaging standpoint, you know, the sustainability and durability of EBITDA margins in kind of that low to mid 30% range is kind of the right way to think. Is that a correct takeaway? I think it's 100% the right takeaway, and that's kind of, you know, since we took the business over in 2015 has been really, you know, focused on, you know, driving high EBITDA margins and incrementing them up over time and expanding them at a rate faster growth rate faster than our subscription growth rate. We think that's the most appropriate way for this kind of business. You know, there are other business out there that would have a different profile based on, you know, where they are in the business's life cycle. Our business is one because of the very, very long-term nature of our contracts and the fact that our narrowly mission-critical for, you know, the world's largest, biggest and most important companies. That just is gonna generate the highest return over time for our shareholders, and that's kind of our, as Marje says, our North Star. Got it. Thanks much. Thank you. Our next question is from Taylor McGinnis with UBS. Please proceed with your question. Yeah, thanks for taking my question. I believe the 4-Q constant currency subscription revenue growth guide previously implied 14%, so an acceleration, and now the guide implies a deceleration to 8% constant currency. Can you maybe talk about just what really changed in the quarter relative to your expectations and maybe provide more color on the assumptions that were downticked on? Then Marje, just given the uncertainty, any changes in guidance methodology or additional conservatism that might be embedded in the outlook? Hi, Taylor. Thank you for the question. Absolutely. You know, when we, you know, put out guidance, 90 days ago, the range of outcomes was much wider. As we commented on the last call, we had seen some select deal delays, you know, as we've discussed in this Q&A session as well, specifically sort of in Europe and in the tech sector. As we moved through Q3, we saw, you know, definitely some of those deals that slipped close, but then further again, more of them again pushed to the right. You know, as Michael has articulated, you know, this continues to be a choppy environment where we really don't think that the demand is going away, but it's definitely getting pushed to the right. You know, it's really hard to, you know, focus on the specific quarterly growth rates. You know, as you said, we have lowered our expectation for the Q4. In terms of, you know, conservatism, I think, you know, you've seen how we've been setting we really wanna be, we wanna give you the information that we have and the best, the best estimate at the time. You know, I wouldn't say that there is anything sort of unnatural in the quarter. We always try to be transparent. I think that's the reputation as a management team we're trying to build, is to really be transparent with you in terms of what we see in the business. As incremental information arises, we will, you know, update that accordingly. Great. I know, the, you know, things are obviously very fluid in the environment, but if you look over the last two quarters, so sub-sequential subscription revs growth has been in the low single digits, and it looks like the 4Q guide implies something similar. Just as we think about, you know, next year, is it fair to use that sequential growth as a starting point for modeling next year? Anything in terms of seasonality or, you know, with the environment and some of these delayed deals that we should keep in mind? Yeah. I think there is a lot of moving parts. Obviously, we've been, you know, year to date, we've, you know, reported subscription revenue in the double digits. You know, the macro environment is choppy, so the quarterly growth rates may deviate from quarter to quarter. You know, next quarter will give you a lot more detail in terms of how we think about the year. You know, we'll have further updates on the macro environment, et cetera. You know, I think it's too early to, you know, fully, you know, talk about the talk about the year. Again, you know, just to be super clear, you know, we don't expect the demand that has been pushed out to disappear. We expect these deals to come back and, you know, as the macro stabilizes, come back. We've also talked about our PS revenue growth. We expect that to become additive to our growth rate. We feel good about, you know, we feel good about the outlook, looking ahead of us. Perfect. Just my last question is, are you able to quantify, you know, the deals that were pushed and, you know, how you're thinking about timing loosely from that perspective? We haven't quantified the actual, you know, the specific dollar amount. You know, I think some of these, as the macro environment changes, you know, again, the time to close just deviates from the normal rhythm that we typically see. You know, some of these deals could be just a matter of closing, you know, on this side of the quarter or next side of the quarter, right? We try to make the right economic decisions and, you know, not be beholden to our quarter close either. I wouldn't say that there's anything sort of very different that we think we can articulate in terms of, you know, beyond the near term macro choppiness that has changed in our business. Got it. Thanks so much for answering my questions. Thanks, Taylor. Once again, if you have a question or a comment, please indicate so by pressing star one on your touch tone phone. The next question is from Andrew Obin with Bank of America. Please proceed with your question. Good evening. This is David Ridley-Lane on for Andrew Obin. Curious what the feedback was from the leaders forum you held in October, and what was the tone of clients there, and any early indication of kind of client budgets here in calendar 2023. Yeah, it was, that's a remarkable event. It's the first one we've had for in 3 years, and that's been going on, I think, for 7 years prior. That particular event, just for information, is you know, oriented towards the very senior executives, in a very intimate environment. We get It's about 90% customers telling what they do on our application and our platform, which is really powerful. I'd say overall, you know, the environment was, you know, certainly very enthusiastic about our relationships. I learned, I always learn a lot. You know, you talk to I have customers, I sat, had dinner with one that was the world's biggest producer of frozen fish. All the things they do for that and how they're using our transportation management system to help them get fish to market sooner. It's a really great event. Overall, I think, you know, people in the supply chain business, you know, never cease to try to improve their operations. Companies will never, ever stop trying to reduce or improve their gross margin. That's the fundamental nature of supply chain software. They all have great ideas, and it's a matter of how do they, you know, compete internally for the projects because the, you know, companies only have so many people to do so many things at one time. You know, that's the same as it's kind of always been in my, you know, almost 25 years in the, in the business. In terms of budgets, you know, obviously, you know, everybody is facing, you know, the same, uncertainties. I'd say, you know, the, the macro environment certainly is, still a reverberation of COVID, and you see that clearly in the numbers. I think more it's the uncertainty of what's gonna come that people are uncertain about. I think that's kind of needs to be a little more clarity. I think overall that's the issue, is that, you know, we've been talking about a recession now for a year, and people don't know how to really react to that and deal with that. I think that's really the hesitancy, is really just a continued uncertainty, one way or the other. Got it. Just to sort of follow up on that, I mean, in the past quarters, you've talked about pipeline growth, exceeding bookings. Are you still, you know, adding to the pipeline here, even as customers are, more cautious? I absolutely. You know, we've seen this story before. The demand doesn't change, the pipeline still goes. Our yield rate maybe, you know, come down a notch or two on conversion. Again, they come to us to solve very complex problems. Those complex problems are not for the here or now, they're for the next 15 years. You know, it's just a matter of whatever doesn't get done today usually gets done tomorrow, and we would expect nothing to change in that kind of a cycle. Great. Then one last one for me. Just on the logistics transition for the logistics clients. Yeah. Are we talking another three months, six months? I'm just sort of better understanding kind of the headwinds on the professional services side. Yeah. It, you know, it wasn't an overly large, combination for us. It was in $40 million kind of range. We inherited some things that we had to, you know, clean up. You know, we're doing that, as is our responsibility. You know, we expect that to last, you know, a quarter or two more maybe, something like that. kind of, you know, start to normalize out. You know, if you remember, smaller companies, you usually inherit a little more problems with smaller companies given the nature of their business. That's something we're used to dealing with, and, you know, it's something that we've had great success kind of, you know, fixing over time, and that's kind of the essence of our business, is we make operations better, and we expect to do that here as well. If it takes a little bit of time, with time we'll do it right, and then we'll have a, you know, very long-standing relationship. Just on that, on that acquisition, I just have to comment. Like the opportunity set there is enormous. I was literally talking to one of our larger clients today, and, you know, he was talking about a transition from like the on-premise solution that we had to a cloud solution. They had something like 120 servers that they were like dying to have us take over. We think the global nature of the parcel solution is very differentiated in the marketplace. That's really the primary reason we really, you know, really liked that company when we saw it and knowing that we had to deal with some stuff to get to the other side. We'll have a very unique solution that combines with our, you know, really great solution on our TMS and Global Trade and also international shipping via our bookings platform. We're really building what we believe is the world's best logistics execution system. I couldn't be any more excited about where we are with that. Thank you very much. Great talking to you. The next question is from Fred Lee with Credit Suisse. Please proceed with your question. Hey, thank you for taking my question. just one more macro question. I was just wondering if the selling environment deteriorated incrementally this quarter versus FQ2. Yeah, I wouldn't say it's incrementally better or worse. I think I understood the question of is it incrementally better or worse, Fred. You took that a little bit. I wouldn't say it's incrementally better or worse. I just think it's continues to be around uncertainty and how companies deal with that uncertainty. Certainly in, you know, in the tech environment, you see it. Like you really see it real time every day. Companies certainly starting to taper and starting to say, "Okay, I'm not gonna, you know, invest in everything all at once." I think that's the only thing that I would say is, you know, has kind of been more firmed up. The rest of it's the same chop we've seen, you know, for really three quarters now. Got it. Thank you. Just another question around how competition has been behaving, especially some of the venture-backed startups that might not have as strong a balance sheet. Are they acting any less rational than they have historically? When you don't have to generate a profit, you can do a lot of irrational things. The venture-backed space both kind of, you know, are able to, you know, essentially subsidize their business, that's not new, though. I mean, this has been the case for a long time, and that's the market we participate in. You know, we don't see them acting any more or less normally than the way they do. That's just part of part of the market. We believe we have a obviously a more sustainable business model, because we generate, you know... Hello? Hello? I'm sorry, Fred, you broke up. Sorry about that. Just one final question for Marje. Can y'all hear me? Just one final question for Marje on RPO. I know that there's some acquisition noise in there, but the $795 million apples to apples, what was that growth year-over-year? The number is, you know, obviously it's pro forma for acquisition. When you look at, you know, the year ago number, I think, I don't know it from the top of my head, but I think it was around $731 versus the $795 this quarter. Around 8% growth rate. Great. Thank you very much. Absolutely. Thank you. We have reached the end of the question and answer session. This concludes today's conference. You may disconnect your phone line.