Hello, thank you for standing by, and welcome to SPS Commerce first quarter 2022 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'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Irmina Blaszczyk, Investor Relations, SPS Commerce. Please go ahead. Thank you, Josh. Good afternoon, everyone, and thank you for joining us on SPS Commerce first quarter 2022 conference call. We will make certain statements today, including with respect to our expected financial results, go to market strategy, and efforts designed to increase our traction and penetration with retailers and other customers. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note, these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to our SEC filings, specifically our Form 10-K, as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available at our website, spscommerce.com, and at the SEC's website, sec.gov. In addition, we are providing a historical data sheet for easy reference on our investor relations section of our website, spscommerce.com. During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP earnings per share. In our press release and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures. With that, I will turn the call over to Archie. Thanks, Irmina, and welcome everyone. Before I start with our Q1 business overview, I want to recognize that our thoughts are with the people in Ukraine. As we continue to monitor the ongoing crisis, our priority is our employees and their safety. We're doing what we can to support our team in Kyiv and their families, while other SPS teams remain focused on business continuity and delivering to our customers. Turning to first quarter 2022 results, our strong performance points to an ongoing evolution in retail. Omnichannel dynamics are creating growth opportunities for suppliers, driving the need for efficiency and continuity across the supply chain. Since 2020, we observed how the pandemic impacted the retail industry and consumer shopping habits, which in turn compelled trading partners to evaluate their infrastructure and supply chain processes. These dynamics emphasize the need for automation, agility, and demand planning, all of which accelerate EDI adoption. Over the last year, we've seen a significant increase in volume of electronic purchase orders, advance ship notices, and electronic invoices. In the first quarter of 2022, we continued to see strong momentum in Fulfillment, which grew 19% year-over-year. Analytics had another strong quarter and grew 11%. Total revenue grew 17% to $105.2 million, and recurring revenue grew 18%. Adjusted EBITDA grew 25% to $31.8 million. Automation is essential to achieve agility and efficiency in a dynamic omnichannel environment. The capability to scale depends on a supplier's capacity to fulfill as many orders as possible without being hampered by retailers' technical requirements. Brands like HidrateSpark partnered with SPS Commerce to automate Fulfillment and expand their business across online sites, marketplaces, and retail stores. Automation provided HidrateSpark the agility to leverage omnichannel and grow their business nationwide. To reduce the risk of delays along the supply chain, demand planning is critical. Predicting the level of stock to satisfy customer needs at any given time results in higher sales and increased profitability. Big data analytics not only has the potential to improve the operating margins of companies by 60%, but also revolutionize all areas of retail. For example, as a result of collaboration between Pantene, The Weather Channel, and Walgreens, Pantene saw its sales increase over 10% in Walgreens stores through its data-driven Haircast project. Amazon is so successful in using big data marketing and sales tactics that 35% of its sales are generated from its customer recommendations algorithm. Walmart is developing the world's largest private cloud with algorithms built to track data on inventory, transactions, and competitor activity. This allows them to respond to market changes almost instantly. At SPS, our retail analytics software is the key to an efficient demand planning and gives decision-makers the overview of trends and patterns needed to make macro-scale decisions and react to micro-scale trends and unexpected challenges. Please remain on the line. Your conference will resume shortly. Good afternoon, everyone. Sorry, we somehow got disconnected. Not sure what happened on the technology front. Therabody, a pioneer in the wellness technology space, has been an SPS Fulfillment customer since 2019. They experienced high growth in recent years and became an Analytics customer. Leveraging global point-of-sale data, Therabody is able to optimize inventory management to increase sales and continue to add more retailers to the network in North America, Europe, and Australia. In summary, SPS continues to be a valuable player partner to retailers and suppliers as they navigate ongoing challenges and seize opportunities to evolve their omnichannel strategies. Our comprehensive suite of solutions includes all the elements that trading partners need to communicate inventory, order, delivery, and status information. One connection to SPS Commerce provides instant access to the largest network of up-to-date mapped EDI connections and more than 105,000 players in the retail space. With that, I'll turn over to Kim to discuss our financial results. Thanks, Archie. We had a great first quarter of 2022. Revenue was $105.2 million, a 17% increase over Q1 of last year, and represented our 85th consecutive quarter of revenue growth. Recurring revenue this quarter grew 18% year-over-year. The total number of recurring revenue customers increased 12% year-over-year to approximately 37,900, and wallet share increased 5% to 10,350. For the quarter, adjusted EBITDA grew 25% to $31.8 million compared to $25.5 million in Q1 of last year. We ended the quarter with total cash and investments of approximately $243 million and repurchased approximately $15 million of SPS shares. Now turning to guidance. For the second quarter of 2022, we expect revenue to be in the range of $108.3 million-$109.3 million. We expect adjusted EBITDA to be in the range of $30 million-$30.5 million. We expect fully diluted earnings per share to be in the range of $0.25-$0.26, with fully diluted weighted average shares outstanding of approximately 37.3 million shares. We expect non-GAAP diluted earnings per share to be in the range of $0.48-$0.49, with stock-based compensation expense of approximately $9.4 million, depreciation expense of approximately $4.2 million, and amortization expense of approximately $2.5 million. For the full year, we expect revenue to be in the range of $443.4 million-$445.9 million, representing approximately 15%-16% growth over 2021. We expect adjusted EBITDA to be in the range of $126.7 million-$128 million, representing 18%-20% growth over 2021. We expect fully diluted earnings per share to be in the range of $1.22-$1.24, with fully diluted weighted average shares outstanding of approximately 37.3 million shares. We expect non-GAAP diluted earnings per share to be in the range of $2.07-$2.09, with stock-based compensation expense of approximately $34.9 million, depreciation expense of approximately $18 million, and amortization expense for the year of approximately $10 million. For the remainder of the year on a quarterly basis, investors should model a 30% effective tax rate calculated on GAAP pre-tax net earnings. Beyond 2022, we maintain our annual revenue growth expectations of 15% or greater, and we continue to expect adjusted EBITDA dollar growth of 15%-25% as we invest in the business to capitalize on market dynamics and support current and future growth. In the long term, we maintain our target model for adjusted EBITDA margin of 35%. In summary, ongoing evolution in retail and the need for supply chain efficiency is fueling the need for automation, driving EDI adoption, and underscoring the growing market opportunity in front of us. With that, I'd like to open the call to questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our first question comes from Matt Pfau with William Blair. You may proceed with your question. Hey, guys. Thanks for taking my questions. Wanted to ask, with, you know, inflation, increasing here and impacting some of the retailers and suppliers that you guys do business with, does that have any impact on demand for your product as companies look to perhaps optimize their operations and reduce costs? You know, technically, Matt, it would have a slight positive, but we haven't seen anything on that front. On inflation, there's obviously a lot of discussion about it. How do we pass on costs? The one positive is that it does make people try to make other parts of their operation more efficient, which should be a slight positive. Any correlation that we're seeing, it'd be very, very challenging for me to. What I just said, that it's had any impact. Got it. Just last one for me on the Data Masons acquisition. I think the part of the thesis behind that was Dynamics 365 replacement cycle. Are you guys seeing that play out as you expected? Yeah, we've seen that play out extremely well, and Microsoft continues to execute along that. Obviously new customers and new logos moving to Microsoft as we're now in a position where we not only have far and away the largest network, which has always been our biggest competitive advantage, but now we clearly have the best integration solution as well into Microsoft. We're seeing incredible momentum in the Microsoft space. Okay. Great, guys. Thanks a lot. Appreciate it. Thanks. Thank you. Our next question comes from Parker Lane with Stifel. You may proceed with your question. Yeah. Hi. Thanks, Kim and Archie. How's it going? Wanted to talk about wallet share for a second. If you look at the last couple of years, it's bounced around a little bit. Obviously, you made a few acquisitions here. It's been a pretty dynamic environment for your customers to operate in. Kim, in the context of your 15%+ growth outlook, how should we think about the wallet share component? Is this 5%, you know, sort of mid-single digits the right level going forward, or will it continue to bounce around quarter to quarter? Sure, great to hear from you, Parker. In general, when we look at that 15% or greater revenue or top line growth, you should expect ongoing a nice healthy contribution from both customer adds as well as wallet share. One thing to keep in mind when you look at that 5% growth this quarter, do keep in mind that we acquired a company called Genius Central, Q4, sort of mid-Q4 last year. That company that we acquired, we added a lot of customers from that acquisition, approximately 1,800 customers. However, their average revenue per recurring revenue customer was much lower than ours. Theirs is, think of it as sort of sub $2,000, and ours is, you know, call it $10,000. When you just take that contribution, nothing else, that has an impact to reduce or a negative impact to our overall wallet share by $350. It's still an increase, 5% year-over-year, but were it not for that acquisition, you would have actually seen that wallet share higher single digits. Yeah, very helpful. Makes a lot of sense. Archie, your comments on the Analytics business, you know, the demand planning components that your customers are dealing with here, do you have more visibility, you'd say, into Analytics growth for the remainder of the year than you did 90 days ago? How's that pipeline looking today for Analytics? You know, the pipeline continues to strengthen, and, I mean, we feel optimistic about it. We've always felt optimistic, but it feels like it's, you know, a couple quarters ago, we started to have the growth up, and the question was, is it sustainable? I believe the current levels are sustainable, you know, bounce around a point or two, so I consider that the same. We view it as we're now in a new era on the Analytics product and feel very good about that. Got it. Understood. Thanks again. Thank you. Our next question comes from Scott Berg with Needham. You may proceed with your question. Hey, Archie and Kim. Congrats on the good quarter. Thanks for taking my questions. I guess I have two. Archie, I wanted to unpack your comments a little bit on significant growth in the EDI. How should we think about the growth usage of your platform if we break it down a little bit? Is it maybe selling into larger customers that you know just are having more volumes that's kinda contributing to that growth? Is it something around maybe drop shipments? I didn't know if there's anything under the covers there that might be helpful to unpack. Yeah. Thanks, Scott. I think there's a lot of different components to it. We do continue to see nice momentum in the larger customers, especially with our acquisitions around adapters and last mile integration, which has helped us along all the path. We continue to see that and one of the reasons for that is we are seeing upgrade and/or changes of platforms to that segment, which bodes well for us. I think on the smaller and mid-size, we do continue to see momentum there as well. The drop ship, obviously, component allows retailers to expand their network of suppliers. You know, when you think about the total addressable market for us, it really is all about the total trading partner relationships that exist, and we've seen continued nice movement from that standpoint. I think it's, Scott, along all elements of it, and then obviously with Analytics kicking in. Feel pretty good about all segments of the business right now. Got it. From a follow-up perspective, one of the things that I've been tracking over the last probably six to eight quarters is the ERP replacement cycle kind of broadly out there. This is kind of zooming out on Matt's question a couple minutes ago, but what are you seeing more broadly across your channel partners within those different ERP segments? Seems to be that the demand environment is getting a little bit stronger. Maybe it's pent-up demand that, you know, transactions that didn't get done in the early stages of the pandemic that's falling out. Are you seeing that benefit the business, or is there any expectation of maybe elevated deal flow there that could help you in the short term? You know, we're seeing it more constant. It's the one thing that I was actually surprised at the beginning of the pandemic, how strong it did stay. I mean, I anticipate 2020 to have significantly less contribution from channel, and that actually didn't happen. We just continue to see it strong. The one thing that we do continue to see, and each environment's a little bit different, is the continued migration to the cloud, and the segments that have done that well, they're gonna have outsized win rates. We continue to see that continue to happen. Great. That's all I have. Thanks for taking my questions. Thank you. Our next question comes from Joe Vruwink with Baird. You may proceed with your question. Great. Hi, everyone. I maybe wanted to start just on the customer adds in the quarter. You know, hard to keep up the torrid rate you've been running at, but it was, I suppose, a bit less here in 1Q. Is that according to plan, or maybe just a little more detail of the growth contributors this quarter? Sure. To your point, Joe, in the quarter we added a net approximately 400 customers. That is lower than that really heightened or high rate from 2021. It's back closer to pre-pandemic levels, although it's still higher. If you were to look at, you know, full year 2019 and you average across all those quarters, we were averaging about 300 a quarter. This quarter we're at 400. A bit higher than pre-pandemic levels, but lower than last year, which was very high, as you know. As far as relative to our expectations, right in line with our expectations. Our overall results, we actually delivered slightly higher on overall revenue, really across the board based on solid performance as it relates to community activities and net customer adds very much in line with our expectations. Okay. Just looking at your guidance for the year and taking kinda midpoint to midpoint, I think if I true things up for the upside in 1Q, the full year view is basically moving up by the 1Q beat and maybe down a little bit if I take the EBITDA midpoint. Is that maybe just a function of your investment outlook and having expenses more weighted to future quarters or any additional details you can give there? Sure. When you look at it from an annual and you say, how does our current guidance compare to 90 days ago, to your point, our revenue has increased the high end by a few $100,000 reflective of the beat from our high end in Q1. Our EBITDA, we're actually taking up about $1.5 million from 90 days ago. Now when you look at our results in Q1, we did significantly beat on the EBITDA side. That's primarily the timing of our hires. Our guidance that we have for Q2 and the remainder of the year does take into account our expectation that we will be continuing to add those resources, particularly in the customer success area and also somewhat in the sales area, which was our plan all along. It's just happening a little bit later. Didn't get quite as many in Q1 as we had anticipated. That's to meet the needs of our existing customers as well as the future opportunity we see in front of us. Okay. I'll leave it there. Thank you. Thank you. Our next question comes from Jason Celino with KeyBanc Capital Markets. You may proceed with your question. Great. Hey, Archie, hey, Kim. Good afternoon. Hi. Perfect. I wanna ask about Carrier Service. You know, it's been a couple quarters since we've seen it. I wanna know how it's going. Then, you know, more broadly speaking, the effort, you know, to expand the product portfolio. Yeah, we continue to see momentum. We continue to see adoption on existing and new customers. You know, I think a couple things. One, as we add new products, we also think that helps retention, it helps win rates. Obviously, it helps our moat. We continue to see momentum, and we continue to look at new opportunities for product expansion, both from building it ourselves, partnering, and acquisitions. Okay, great. More of a housekeeping question. You know, Genius Central, how did it perform in the quarter? Anything anecdotal would be helpful. Thanks. Sure. Genius Central, we acquired that company in sort of mid Q4. Love the portfolio that brought to us, as well as a great team as well. It is performing right in line with what our expectations were for the quarter. Feel really good about it. Okay, great. Thanks. Thank you. Our next question comes from Mark Schappel with Loop Capital Markets. You may proceed with your question. Hi. Thank you for taking my question. Archie, question for you on staffing. We're hearing several company managements discuss the challenging labor market for IT talent more and more these days. I was wondering if you could just give us a sense if you're running on plan, maybe a little bit behind plan with respect to hiring. Also, you know, could you maybe just address whether you're having to, you know, raise comp a little bit more just to stay competitive? Yeah, I think a couple things. One, the job market has consistently been tight. I think, if you go back to pre-pandemic, you know, it feels in line with that, maybe even a little easier. But I think we had a year or two where companies had almost no turnover, had almost no changes. So, relative to that it's tougher, but relative to pre-pandemic, I would say it's more consistent. You know, we've always tried to make sure we remain competitive in the marketplace with compensation and, you know, continue to do that. Okay, great. Thanks. As a follow-up, in response to an earlier question around your Analytics solution, you mentioned that, I think the term you used, that you're in a new era around the Analytics product. I was wondering, is that new era because you've enhanced the solution over the last year or two, or is it just because customers are more aware of it and have a greater need for the solution? I think. You know, if you look back at the history of Analytics, right before the pandemic hit, we were seeing great momentum. We talked about our opening up our office in Europe, and overall, we were seeing great momentum. When the pandemic hit, it just all came to almost a complete stop, for a couple reasons. One, it wasn't the top priority. Two, at the very beginning, it was viewed as discretionary spend. With store closures, et cetera, people really backed off. We actually had people moving back off of using different things for cost-cutting measures, et cetera. I think as we move forward and people are more confident in the long term, in their long-term future, we're seeing it getting back to where it was before. I think the other contributor to that is, if you look at what's happened to e-commerce since the beginning of 2020, the stores are playing a significantly larger role in e-commerce. For the first time, at least I believe it's the first time, stores, retailers, brick and mortar retailers are using their stores as a competitive advantage for either shipping from those stores or pick up in stores. So that is also another driver of Analytics which we think will continue forward. Great. Thank Thank you. I think we're out of the pandemic phase. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. Our next question comes from Nehal Chokshi with Northland Capital Markets. You may proceed with your question. Yeah. Thank you, and congrats on a solid quarter, especially what seems to be remaining a very tough e-commerce market, really shows that you guys are very omnichannel driven. Real quickly, you probably covered this in the script, but what was organic revenue growth rate for the quarter? We provide just the reported numbers, and then just keep in mind the Genius Central, we said for the year that that would give about $3 million of revenue. If you do the reverse math off of that, you'll get yourself the organic growth rate is just, you know, slightly below what the reported is. Got it. Understood. Okay. Then my favorite quarterly question. You know, you guys raised your long-term growth rate from 10%+ to 15%+, I think almost a year ago, maybe nine months ago. Part of that was an assertion that the opportunity that you're scaling to is a lot larger than the $5 billion that's framed by 200,000 target customers at a $25,000 ARPU. You got any updates on those parameters that, you know, would help to better frame what the actual number is that you're scaling to then? To your point, we have communicated that we believe the opportunity is greater than $5 billion, and we've also said we think that it's actually much greater than $5 billion. The primary driver as it relates to that is when we originally came up with that number, it was, think of it as our core Fulfillment as well as our Analytics product. As you know, we have begun to start offering some new sources of revenue. Think of those as like add-on products like Carrier Service, which was asked about earlier on this call. Our expectation is over the years, we'll have an opportunity to continue to offer more and more of those, think of those as product or revenue add-ons. Each of those would really actually be additive or make that opportunity significantly greater than $5 billion. So we haven't updated that number yet simply because we already $5 billion relative to where we are is a huge opportunity, and it just means the answer just becomes that much larger. There'll be a point in the future where we will take the opportunity to update that number, but rest assured there's a lot of opportunity on the total addressable market that we see. With our leadership position, we really think we're the ones that are poised to achieve that. Got it. You know, with respect to transportation services, I think when you guys first introduced it and talked about it in April 2020, you were talking about being more of like a nominal fee. You know, what is actually that nominal fee level? Is it sort of like basically $1,000 a year? Do you see that increasing? Sure. When you think about those, it might be relevant also as you just think about add-on products in general. When we think about that for an individual customer, you can think of it as it may change how much they're paying us. It could be about a 10% uplift, 10%-20%, depending on the customer. Got it. Thank you very much. Thank you. Our next question comes from Joe Goodwin with JMP Securities. You may proceed with your question. Great. Hi, Archie. Hi, Kim. Thank you so much for taking my question. I know, you know, Europe's not a huge, you know, percentage of your total business, but just curious, you know, what you're seeing out there, with everything going on, if you've seen any softness in the business? You know, we have not seen softness, and our European business is more heavily focused on the Analytics. We continue to see nice momentum there as we're seeing overall in our Analytics business. Seeing the customers are more and more committed to allowing this to help drive their revenue growth. We're seeing nice strength there, but it is primarily in Analytics in Europe, although we do have a nice Fulfillment business, but our growth is coming from Analytics. Understood. Thank you. Just a quick follow-up regarding M&A. You know, given the valuations have come down, you know, have you seen an influx in, you know, maybe inbound opportunities, or if you could just talk about your M&A pipeline and how you're feeling about M&A generally in the current environment? Yeah. It's interesting because over the last 10 years, it doesn't appear that activity goes up or down all that significantly with the valuations going up and down. It makes it easier in an upward trend actually, because we're tending to buy more private companies that are individually owned, and so people have a time in their life when they wanna sell. That seems for us to be a bigger driver. Valuations coming down, if anything, it would make it slightly harder just because people are less likely to wanna get out in times. The pipeline continues pretty consistent with what it's been in the past. Thank you. Thank you. That concludes our Q&A session. This concludes today's conference call. Thank you for participating. You may now disconnect.