Okay. We're going to kick off day three. Thanks everyone for coming. It's my pleasure to welcome the team from Pattern Group. David Wright, CEO. Dave, this is your first Communacopia. Thank you for coming to the conference. You were going through a process a year ago during this conference, and you've been a public company for just around a year now. Yeah. It's been a great journey. Yeah. Well, welcome to the conference. Let me start by reading a safe harbor I have to read, and then we're going to get into a conversation. Before we begin, I'd like to remind everyone that today's presentation and webcast may contain forward-looking statements based on the company's current expectations and assumptions about future events. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from what the company discusses today. Please refer to the company's latest filings with the SEC for more information on these risks and uncertainties. With that, let's get started. I always like to take a step back before we take a step forward. You've been on a journey in terms of the company you've built and scaled. As you said, you've now been a public company for just about a year. Talk to us a little bit about setting the stage for the journey you've been on and what you've been trying to build and scale. Well, it's been quite fun. I just like solving problems, and so, it seems very much the same as pre-IPO. For all intents and purposes, we're doing the exact same thing. Matter of fact, the stock will go up sometimes and stock will go down, and we get praised when it goes up, and we get hit when it goes down. I'm like, "We do the exact same thing as we did the whole time." So it's been a lot of fun. It's been an interesting journey. But the core of what we do, if you think about it, we are just trying to build a technology-driven intelligence layer that's very thin, operationally efficient for brands across digital surfaces. And those surfaces are becoming broader than we ever expected back when we started. Because we help on the digital side, 10% of all goods were sold digitally when we started the company. Now it's 24%, 25%. So just that has been a boom for us. And then the surface area, even when we went public a year ago, we were 94% Amazon. If you think about your own purchase behavior, you probably are somewhat similar. This last quarter, we were 9.35%. So almost 10% non-Amazon, and that surface area is complex and evolving quickly. So building technology around that and operational efficiency, moving the box, is just a highly complex challenge that brands need to do at a price point they can afford. Yeah. So talk to us a little bit about that environment, right? Because as we look at it, the e-commerce landscape is only getting more complicated, not less complicated. So for your existing brands, and when you have conversations with where brands are today and coming into your ecosystem, what are you trying to solve for? What are the most often questions you get? Where do you think some of these solutions have to go to meet the landscape and the shifting of the sands? Well, the core has just always stayed the same. A brand has some product idea. They need to get it into the mind and the hands of a consumer through all means necessary, and that landscape is complex. And they need to be able to do it at the lowest possible price. So if you think of Pattern, we track what we call internally, what we call cost- to- serve. So how much does it cost us to run $1 of revenue through the entire machine across all surface areas for a brand? And then, of course, I estimate, and we have some pretty good numbers on what it might cost a brand to do it on their own, because that's sort of who we compete with. And I don't believe at the scale we're at, a brand can do it at the same price point. I'll give you one example. If you just take logistics, in many cases, a brand will do the final mile delivery, and in many cases, they'll send into a marketplace used, like Fulfillment by Amazon or some network. For us, just that inbound process to just marketplaces, we do 95% of the time full truckloads at $0.11 a unit. For that final 5%, it's split between parcel and partial trucks. Just partial trucks is $0.44, 4x the cost. If you're sitting in a brand's shoes, imagine a brand, I don't think of one, Pandora jewelry, even TUMI luggage, both of which are brands that work with us, they can rarely send in a full truckload to 18 locations a week. It's near impossible. That thin layer becomes. We're just trying to do it as efficiently and in an optimized way for a brand at a price point we don't believe they can do on their own. Right. Maybe just sticking with that as a theme and just sticking with the framework of what you've built, talk to us a little about what you do, for those who know it less, what you do for brands on generating business for them, helping on the inventory side of the equation, helping them on the intelligence side of the equation, running their business, just so we can level set with some of the key kernels of where you touch these brands and how you help them grow and scale. Yeah. Maybe if we go back to the starting of the company. The start of the company was my cousin had this little girl's headband brand, and we got talking about how she might grow that brand, and it's quite simple. My background is all on the tech data side. I had never worked with a brand. I had never sold a widget. I didn't enjoy that work at all, I didn't think. Then I got working on that, and it was a formula. Revenue for the headbands is traffic. How many eyeballs can you get to see a product? Times conversion, times price, times availability. Is the good available close to the consumer? So our entire tech stack, 44 patents, either issued or pending now, is built on that and that alone. Revenue for a brand is traffic conversion price. Then we just measure. We know if our machine works because our NRR, net revenue retention of brands, which includes any brand that might leave us, is running now at 129%. That means that that optimization engine and the logistics engine and the price point that a brand is willing to pay and can pay is all working. We focus on that number. If that NRR number is high, you will see us win for a very long time. Because for one, we do not have to go out and resell. We have a built-in 30% growth or 29% or whatever it was last quarter. It is easy for a sales team to go and close deals because we can say the machine works. Okay. Understood. You talked a little bit earlier about the percentage of the mix of the business that is Amazon today, but you have faster growth in the non-Amazon part of the business. Another element of the e-commerce landscape is the rise of these other marketplaces, not only in the U.S., but globally. Talk a little bit about how the marketplace landscape is changing and how that opens up potential for you to work with brands as they think about changing their geographic SKU and even their seller-based marketplace SKU. Yeah. There is a lot of marketplaces out there. There are some very interesting things. Walmart is one of them. Been around for a very long time. They are making a play that is quite interesting. We have 3x'd on the platform in the last 12 months. I think, based on talking to their leadership over the last while, I think they are going to be very interesting, but they are not alone. Coupang in South Korea. Internationally, it is quite varied. Imagine if you are sitting in a brand seat and you say to yourself, "Okay, Walmart is 4% of your business." You are like, "Oh, okay. Well, what do I do with that? Well, I cannot not run Walmart." You have got to put people, you have got to run all of the advertising technology. Anything that Walmart comes up with, you need to build around. You need to layer that in with, you have got TikTok, you have got social commerce, you have got all the LLM discovery elements that are coming up, agentic commerce. It does not matter if they are small amounts of revenue for a brand, they have to manage it. All of those surface areas becomes a place where they say, "Okay, Pattern, we do not have enough people in seat to run that." Okay, understood. AI has certainly been central to what you've talked about with investors. You've introduced a lot of product innovation, especially at your own event earlier this year. Talk a little bit about the impact that AI might have in terms of what you're building and scaling, and how your platform might change as a result of it. Well, you could say we're almost betting the farm on that, but we sort of have been all along. We had patents on classic machine learning before AI was even relevant or anyone was even talking about it, and that would fall under the AI umbrella. If you go forward a little bit on just building, what we have to build or what brands have to build is traffic times conversion times price across all geographies at all marketplaces, and there's no way to shortcut it. You have to break down, okay, where are all the drivers of traffic? What are the innovations all the marketplaces are thinking of? What are all the different ways people do discovery now in an agentic world? Then how do you convert them? Now rather than just keywords, keyword phrases, SEO, we're leaning into semantic intent. That surface area is getting very complex. The roadmap, if you think globally for us, was we figured 7- 10 years, to even get parity with where we are just in the U.S., and we've doubled our output on engineering, software factory-wise. We expect that to accelerate even faster and be a massive enabler for brands at a very low price point. So very exciting where that's headed for us. Okay. Understood. You talked earlier about net dollar retention. Talk to us a little bit about what you've learned about brands on the platform and how the relationships and the unit economics of those brands evolve as their relationship deepens with you. Day one versus how these relationships evolve into the second and third year of those relationships. Yeah, I think everyone measures their concept of NPS. All of our metrics get better with time, which is interesting. I do not know if that is, maybe our sales guys could do a little better on the pitch. But overall, the relationships get stronger and stronger. 53% of our revenue now comes from brands that have been with us longer than five years, which is up from every year that number seems to climb, which you would expect, now that we are 13 years in business as a company, as long as you build a machine that works. But if you look across the landscape of people we compete with, it is very hard to continue the innovation pipeline, to continue winning for our brands. A lot of companies will build or get a patent on a thing and win for a little while until you have exhausted that area of what you happen to be good at. Pattern has demonstrated that year on year, but we just obsess on that formula and it is changing every day. That will lead to the longer you are in seat with us, the more trust you get that we are going to keep doing that. That is where those numbers come from. Understood. When you think about what you are building and where you sit in the ecosystem, how do you think about the competitive landscape, like who you are competing against? You touch a lot of different areas of the e-commerce ecosystem, and where do you find where you sit within the broader competitive landscape and how you would assess who you are competing against right now? Yeah. Well, I guess there is a few areas where we try to stay out. Because we are a thin layer that sits on top of any marketplace, we do not care who it is. We do not really compete for the consumer, which is great when you are in the room with Amazon, TikTok, Walmart. They do not see us as a competitor as they do each other. A lot of them are building tools to try to enable brands, but no one is building one layer down where it is just helping brands across any geography. If you take Mexico as an example, MercadoLibre, Amazon is about 50/50 market share on each. From a Pandora perspective, as an example, they do not really care which. They just want to sell more of their products regardless of the platform. That is where Pattern comes in. That is where we have decided we are not going to compete. We don't want to be a marketplace. If you think about our competitors, we have a logistics arm, and we have a technology arm. The logistics arm you would see largely with distributors and whatnot, but they rarely cross into the technology side. The opposite is also true. The people who are great at the technology rarely do anything on logistics. I think the technology folks will have to start moving a little bit more into the logistics side to protect their moat from an AI in a world where maybe software becomes more commoditized. I think you will have to move atoms. Pattern is, it wasn't on purpose 10 years ago, but now we've positioned ourself very well in that spot where scale begets lower costs. Lower costs means you sign more brands and keep more brands, and it's a flywheel that I think is right now I can't see anyone that I'm scared of right now. One of the other things that was unique as I learned more about the company is just the idea that in many ways you're trying to displace the idea that brands can do this for themselves, right? You have a lot of examples of brands that try, hire a couple of people, give it a go, and it's really, really difficult to manage internally. Talk a little bit about how the conversation develops of when a brand's new to you, new to your platform, of educating them about how you can deliver return to them relative to almost the alternative is you have to do it for yourself and manage selling across all these channels and geographies. Well, the brands are incredibly smart, and they know what they're talking about. I think premise number one is you almost have to start with this idea that the person across the table from you will understand very well what you do and what they are capable of doing and what they're not. I think that has just continued to play out the more conversations we have. A lot of times we'll talk to a brand, two years later they'll call us up and they'll say, "Hey, we just can't scale this like you guys can." But they're usually good at something that it brings them hundreds of millions of dollars. A lot of these brands will be built on one channel, one expertise. It might be a dynamic TikTok brand that literally goes from $0 million-$100 million, and that's how they did it. They look around, they say, "Oh, now that we've built a real brand here, let's take it worldwide. Let's take it across the marketplaces. Maybe we get into retail." Some of those things we help them. We don't help them get into retail. We help them with the digital side. But usually, once they build a really innovative product, they do something, and then they realize, "Okay, we know what we're good at. Now we need help on the rest." That's generally where we come in. Okay. Sticking with that as a theme, though, when you talked about it earlier with relation to AI, when you have these conversations with the brands and you think about where you want to take the platform for the longer term, what's some of the technology innovations or product roadmaps that you're the most excited about in terms of scaling and putting in front of brands the way you can when you think about how the nature of this business could change? Well, probably two areas that I love right now. Well, there's a lot, but let's just take the advertising technology we've built. I think when you have a background just on the data side, you get talking to folks on the advertising side, and they start throwing around words like halo effect. Like, "Don't worry. Throw up the road sign, and once people drive by it 17 times, something's going to click, and they're going to buy." That drives data people insane. We've spent many years trying to figure out what is the true return on ad spend. You know our business model. Our business model is, well, generally, not always, but we'll buy the product, and we will sell it across all these marketplaces. So a take inventory model. In those models, we don't care if a brand spends 25% or 2% on ad spend. We make no extra money. That's all pure passthrough. So a chase that we've made some great progress on, we finally got a patent to go through on what we call true ROAS, so true return on ad spend. I think we're one of the few companies on the planet that don't care about how much a brand spends on advertising, because we make no money that way. So we're just trying to tell a brand, "Here's the answer. Here's the platform that we believe you're getting the best bang for your buck on." So the MMMs, we believe we have some very interesting technology there, but we also just don't have a dog in that fight. We don't take a percent of ad spend. That's very exciting. The logistics side is really heating up. We were quite anti-robotics and, I guess, warehouse automation, because a lot of people, it's almost a cool factor, and we were more efficient than everyone we talked to. Our warehouses are quite automated in terms of conveyance and whatnot, but we're starting to see some real progress on robotics that I think is interesting and could lower cost. It will only be for those at scale. It positions us very well there. I guess lastly, conversion, when you get into the, what causes a human or a robot, AI, an agent, to make a purchase? Analyzing that, and you have to cover all those surface areas, has been very fun as well. Understood. Sticking with this theme of fulfillment, talk to us a little bit about the competitive advantage that you think can be built around fulfillment over the medium and long term. From where you are today, where you want to take fulfillment, and how that feeds back into the level of service offering that you can bring to the brands. Yeah. I guess where the landscape is changing the most, probably in agentic commerce, even though it's a very small amount of purchases today. I'll give you one example. We estimate about 20%, 19.3% of all goods purchased are returned. Say you're OpenAI or you're facilitating a transaction where you, unlike an Amazon where they have a machine around returns and whatnot, say there's 14, 20 LLMs where people make purchase decisions and possibly buy on those platforms, the rest of that infrastructure, so reverse logistics, consolidation. Say you sell a T-shirt and you can send a used product to a consumer, but you need a lint remover. If you have to make one more hop in that process of returns, you zero out the shirt. It's worth zero versus being worth, say, $50. We believe that there's a pretty big opportunity there at scale, the whole reverse logistics piece, because we're calling it commerce infrastructure as a service. In our earnings, we're starting to talk about it more and more. We believe that's interesting. Middle mile is also interesting. In the early days of when we started, you now have Amazon FBA, you have Fulfilled by TikTok, you have Walmart Fulfillment Services. If you're a brand, just FBA, which is one of those three big ones, on a weekly basis, you have to send to, it used to be one, then it became three locations, now it's 14 to 18. Everyone's trying to get it closer to the consumer. Even Fulfilled by TikTok is getting more complex. If you're a brand, you cannot afford to do that parcel or partial truck. It has to be full trucks. That will require pretty incredible scale. Pattern will have that across its set of brands. Then you go international. Just those two things, probably middle mile, reverse logistics, I think there is a big opportunity there for Pattern. Okay. Good points. You sit at the intersection of what the consumer is doing. There has been a healthy debate here about the state of the consumer at this conference. We kicked it off with our global economist, and he and I had a conversation. From your vantage point, what does the consumer look like to you right now in terms of behavior patterns and shopping habits? Honest answer probably is, I think it is hard to tell because we do about $3.5 billion in revenue, and we have an entire machine about winning. The consumer looks very strong to us, but it is a biased view because we are optimizing traffic conversion. When we are talking, everyone is very positive about the consumer, and we think it is great. But we read all the same reports everyone reads, and so far, everything looks pretty good and pretty healthy. I think the main concern is just inflation. I think we will see where all that goes. But from our lens, which is a smaller piece of the big pie, and it is a piece we are optimizing, looks great. So it is hard to dissect that and get a view on the broader landscape, if I am being honest. Okay. Totally understood. One of the debates into and out of the last earnings was we saw the acquisition of Thorne by P&G. That raised some questions among investors about concentration of brands and what would happen if brands got acquired by larger companies. I thought you gave a really interesting answer to this on the last earnings call, but just to level set, because I think it does come up as an investor question, how do you think about the array of brands on the platform and what the life cycle of brands are, and how to think about what those opportunities and challenges are when you think about the size and scope of brands inside the company? Well, I think investors will probably go on the same journey I went on quite a few years ago. I thought our platform would be geared towards small, mid-size brands. I did not really expect us to be able to provide a service at a price point where a Procter & Gamble, a Nestlé, the big CPGs, the Panasonics. But we have a lot of those companies now working with us and have been. One of our other brands was acquired by Nestlé in 2018, very large brand, and they are still with us today, almost a decade later. I expect the same. It is just when you get into the nuances of what we do at the price point we do it, even for the mega CPGs, they are pretty happy with the results at that price point. I sort of expect us to expand into those areas more than to see any shrinkage. But it is a fair thought process an investor will have. I had it years ago. It is hard to imagine that a company of our size could provide that value, but I think we are going to prove it over time. Okay. We only have a few minutes left, but maybe if I can squeeze in two more financial-oriented questions. Obviously, you have been producing better growth and better revenue retention than what people thought a year ago. When you think about the incremental dollar of growth and the choices between growth investments into the company versus incremental margins, how do you think about striking the balance there in terms of producing outcomes for investors? Well, the space is huge. I think at the end of the day, an investor wants gross dollars to go up. We are continuing to get operating leverage. We are doing all of it. If you look at the numbers, we are four straight quarters now of 40% revenue growth, about 50% EBITDA growth. That is at a point where we are investing more heavily in the technology than we have ever invested in a pure percent of growth. I think mid-80% tech investment growth. At the same time, we are still getting better overall margins to investors as a percentage. It is not really our focus. The focus is, it is trillions of dollars of potential out there for us to chase. If we provide a phenomenal solution at a great price point, at scale, then investors will have the sheer dollar growth. I believe we can do all of it at the same time, but the focus is on tackling the market and producing the gross dollars for investors. We might be able to do more of it than people think. Okay. At the same time. Maybe the last one for you, just building on that. When you think about the allocation of capital inside the business, maybe frame it as an end question as, what are you the most intrigued by investing in the business from a growth standpoint going forward? The counterbalancing fact is, how should investors and shareholders think about potentially getting capital return out of the business over the longer term? Well, I think it is a pretty unique company if you look at it. For one, we have $346 million as of end of last quarter on the balance sheet. We have zero debt. We have a $150 million revolver that we could tap into on credit. Cash is not an issue. Then you have the opportunity, and we are continuing to win. So we are producing cash, free cash flow, growing 40%. It is quite at scale. At one point I had our BlackRock guy do something, because people like me love to compare themselves against other companies. So I am like, "Hey, look at all the other public companies out there that are at scale. Let us call it, say, a billion in revenue. What would be considered, say, the top 5% in terms of growth CAGRs over, say, a three-year run once you hit that scale? And we estimate we're in the top few percent, and we're doing it with zero debt, free cash flow, and I think it's a very compelling story with a TAM that is enormous. Then you have a shift that is, hey, if I was pure software before, is that scary? Maybe, maybe not. But 99% of our business is tied to moving atoms, so we move the box for 98 point something percent of our revenue. So we are a bit AI-proof wherever that goes, and I'm not making a prediction there, but regardless of which way it goes, I feel pretty good about where we sit. So the overall thesis, I think, is just pretty strong. Okay. All right. Well, I think we're going to leave it there. Thanks so much for being part of the conference. Hope this will be the first of many appearances at Communacopia in the years ahead. Please join me in thanking Pattern Group for being part of the conference.