Good day and welcome to the SPS Commerce first quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Irmina Blaszczyk, Investor Relations for SPS Commerce. Please go ahead. Thank you, Drew. Good afternoon, everyone, and thank you for joining us on SPS first quarter 2024 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 attraction 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 income 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 Chad. Thanks, Irmina, and good afternoon, everyone. Thank you for joining us today. We delivered a strong start to the year. First quarter revenue grew 19% to $149.6 million. Recurring revenue also grew 19%. As a leader in supply chain cloud services, we are capitalizing on ongoing investments in automation. According to the 2023 MHI annual report of over 1,000 supply chain and manufacturing leaders, 74% plan to invest in supply chain technology and innovation, with 90% planning to spend over $1 million, an increase of 24% over last year, to improve supply chain resiliency, sustainability, and transparency. With an ongoing focus on automation across retail, SPS is leveraging our strong channel partnerships with technology leaders such as Acumatica, ensuring we are at the forefront of emerging trends, from the blurring lines in retail to sustainability, as omnichannel dynamics increase the complexity of fulfillment processes. Underscoring the value of such a collaboration, SPS was recently honored with the ISV Partner of the Year Award for Distribution at the Acumatica Summit. SPS offers deep integration expertise to help our customers increase the effectiveness of their ERP system and enable instant connections to trading partners. As we continue to grow our network, we remain committed to excellent customer experience. We recently acquired SAP Business One integration technology from Vision33, an expert in EDI system automation, expanding our leadership in full-service EDI. This acquisition deepens our expertise and experience in this space and broadens our access within the SAP ecosystem. The investments we make in our business and our solutions are key to our customer acquisition success and longstanding partnerships. With evolving retail dynamics, collaboration between trading partners is crucial. SPS is proud to have many decades-long relationships with customers across the retail ecosystem. For example, Select Brands, a third-generation family business, designs and produces small kitchen appliances, offering a diverse brand portfolio and a global presence, selling products through a variety of channels, including big-box retailers, online retailers, and direct-to-consumer. The company's success translated into rapid growth and increasing order volumes, which drove the need for automation. Select Brands upgraded its ERP by migrating to Oracle NetSuite, bolstering its infrastructure for scalability. Leveraging the NetSuite partnership with SPS, the company automated its fulfillment solution, which enhanced order processing with retailers and simplified collaboration with third-party logistics providers. Now a customer for 14 years, Select Brands worked with SPS to connect with 40 retail customers and 3PLs to fully automate the order-to-cash process. This partnership truly exemplifies the benefits SPS customers receive through our network model and commitment to last-mile ERP integration technology. Canadian Tire, the number-one retail brand in Canada, engaged with SPS in 2001, driven by the need to support various omnichannel fulfillment models across their network. As Canadian Tire grew through acquisitions, maintaining agility and flexibility in vendor relationships was paramount, and vendor onboarding for all five acquired retailers was outsourced to SPS. Throughout this longstanding relationship, SPS's role evolved from technology vendor to a strategic partner, delivering valuable insights that support order planning and distribution efforts across Canadian Tire's network. With more than 20 years in partnership supporting this significant growth trajectory, Canadian Tire trusts SPS's retail expertise to help them make the right decisions as they strive for supply chain resilience among evolving market demands. GNC, a leading health and wellness brand, maintains a vast retail presence, strong wholesale partnerships, and a growing digital footprint. Operating as both a retailer and supplier, GNC partnered with SPS to automate data exchange across their entire supply chain, improving collaboration with over 1,000 vendors and more than 30 retailers and grocers. In addition, sharing point-of-sale data enabled GNC and its vendors to optimize inventory management and sales strategies. To summarize, SPS's vast network, retail expertise, and unique go-to-market strategy are significant competitive differentiators. The ongoing investments in supply chain management underscore our conviction in the growth opportunity ahead of us as we continue to execute on our mission to be the world's retail network. With that, I'll turn it over to Kim to discuss our financial results. Thanks, Chad. We had a great first quarter of 2024. Revenue was $149.6 million, a 19% increase over Q1 of last year, and represented our 93rd consecutive quarter of revenue growth. Recurring revenue also grew 19% year-over-year. The total number of recurring revenue customers increased 5% year-over-year to approximately 44,800, and wallet share increased 13% to approximately 12,450. During the quarter, we executed a large-scale enablement campaign with a strategic retailer that rolled out a new requirement to all of their vendors. Since a large majority of those vendors are already existing SPS customers, the number of recurring revenue customers was flat sequentially, but the campaign contributed to solid growth in wallet share. For the quarter, adjusted EBITDA grew 20% to $44.4 million, compared to $37 million in Q1 of last year. We ended the quarter with total cash and investments of $291 million and repurchased approximately $20 million of SPS shares. Now turning to guidance. For the second quarter of 2024, we expect revenue to be in the range of $150.9 million-$151.7 million, which represents approximately 16% year-over-year growth. We expect adjusted EBITDA to be in the range of $43.4 million-$44.1 million. We expect fully diluted earnings per share to be in the range of $0.45-$0.46, with fully diluted weighted average shares outstanding of approximately 37.9 million shares. We expect non-GAAP diluted income per share to be in the range of $0.75-$0.76, with stock-based compensation expense of approximately $11.7 million, depreciation expense of approximately $4.7 million, and amortization expense of approximately $4.6 million. For the full year 2024, we expect revenue to be in the range of $619.9 million-$621.9 million, representing approximately 15%-16% growth over 2023. We expect adjusted EBITDA to be in the range of $185.1 million-$186.7 million, representing growth of approximately 17%-18%. We expect fully diluted earnings per share to be in the range of $1.99-$2.02, with fully diluted weighted average shares outstanding of approximately 37.9 million shares. We expect non-GAAP diluted income per share to be in the range of $3.28-$3.32, with stock-based compensation expense of approximately $56.1 million, depreciation expense of approximately $19.5 million, and amortization expense for the year of approximately $18.1 million. For the remainder of the year, on a quarterly basis, investors should model approximately a 30% effective tax rate calculated on GAAP pre-tax net earnings. Beyond 2024, we maintain our annual revenue growth expectation of 15% or greater as we expand our network through community enablement campaigns and acquisitions. We continue to expect adjusted EBITDA dollar growth of 15%-25% as we invest in the business to support current and future growth. In the long term, we maintain our target model for adjusted EBITDA margin of 35%. In summary, we delivered a strong start to the year and the 93rd consecutive quarter of revenue growth. As we capitalize on ongoing opportunities across our addressable markets, we continue to invest in our solutions and customer experience to strengthen our competitive position across the largest network of trading partners in the retail supply chain. And with that, I'd like to open the call to questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Scott Berg with Needham. Please go ahead. Hi, Chad and Kim. Congrats on the good quarter, and thanks for taking my question. I guess I got a couple here. First of all, Kim, can you talk about the contribution for Vision33 in terms of your full-year guidance, both in terms of top-line impact and maybe margin impact? Sure. So as it relates to Vision33, they were already a partner of ours. So there's really no change that you're going to see on the financials in the year, meaning we were already billing and invoicing our customers. And then Vision33 behind was actually servicing those customers. So no change really anticipated in our financials in 2024. And it was a nominal acquisition, a few million dollars purchase price. Got it. Helpful. And then you mentioned the large enablement campaign. Your business has kind of ebbed and flowed in any given quarter historically between maybe customer adds and growing wallet share, seen it play out many times. But in this quarter, talking about the large customer that already had or the large retailer, most of their customers you're enabling were already on your platform. Was this purely just these customers adding more connections, adding this extra retailer as a connection, or was there an opportunity to cross-sell, I don't know, something like your analytics platform to try to understand maybe what they were buying through this large enablement campaign? Yes, Chad. This is a great example of retailers really expanding the scope of supply chain data that they exchange across our network, which then we're able to monetize. And so in this case, this large retailer was implementing what's called the Advanced Shipment Notice, which is a supply chain message that gives them visibility to inbound inventory. Not only do they get that visibility, it really streamlines things in their distribution centers then because they know what's coming at them. And so we were able to roll out that new program with all their vendors. And because we've had such historic success with this particular customer, we were already highly penetrated for other supply chain information within this customer. So we found a lot of existing subscribing customers as we ran this campaign. But to me, it's a great example of, A, expanding the use of the network for more supply chain data, and B, how when we are deep in a customer, we see that higher penetration of subscribing SPS customers based on that longstanding relationship with that particular retailer. Got it. Helpful. And I apologize. I'll slide one last one in here. I think the natural question you all and myself will get certainly tomorrow is on customer adds that were customer accounts. I should say that was flat quarter-over-quarter, implying no new net adds. I get that you focused on this large enablement campaign, but how should we think about the net new customer acquisition environment? Because I assume your focus on here is not representative of a market that's probably still reasonably healthy. Yeah. I would just say that because we were running this large enablement program, and it was quite substantial in proportion to, say, our average enablement program, and it skewed toward these existing customers, that's why you didn't see the sequential growth in customers, but you showed up in wallet share. I'd say this is no indication of overall what we expect to see going forward. It's just this particular program was pretty dominant in this particular quarter. Got it. Thank you. Helpful. Congratulations. The next question comes from Parker Lane with Stifel. Please go ahead. Yeah. Hi. Thanks for taking the questions here. Kim, you've acquired a few businesses over the last couple of years. I'm wondering when we look at this wallet share strength over the last couple of quarters here, if you can help us understand how much of that is coming from wallet share growth in those acquired businesses, getting them on your network, and establishing more connections versus what, I guess, we could call organic customers. Is there a way to distinguish between the wallet share growth rates between those two cohorts, or is it roughly similar? Sure. So if we think about some of the acquisitions that we've made more recently, that really hasn't had a major change in the wallet share per se. What I would characterize is just if you think about our business model, that just in general, as we acquire customers over time, organically and organically, same rule applies. But as you acquire customers over time, typically, we get more revenue from those customers in future years as their business grows and they connect to more and more retailers. So that sort of network effect that is alive and well within our business model, I'd say that's really a driver to why our wallet share over time just continues to grow on a year-over-year basis. The only thing a little more unique specific in this quarter was the comments that Chad talked about as it related to that large enablement campaign that skewed more to existing versus new customers. Got it. That makes sense. And Chad, one for you. You outlined a few different data points that suggested we could be poised for years of continued investment in your end markets. I'm wondering what some of the competing priorities you're seeing are out there and other vendors, other initiatives that are up for grabs versus SPS expanding further in these end markets? Yeah. I mean, I think overall, especially with the major dynamics, the disruptions we saw in the pandemic, which sort of heightened the focus on supply chain, and we see that continuing combined with just the ever kind of changing and demanding consumer expectations on retailers and the retail supply chain around omnichannel commerce, that we believe there will be continued technology investment in supply chain. As it relates to other different options that people have when they invest in those technologies, we tend to be quite complementary to other technologies. So if there's an implementation of a new ERP system or supply chain applications, often tied to those programs is a big focus on the data that's going to be used in those programs. Because we're really able to help organizations improve the data and accuracy by helping them collaborate with their supply chain partners, it can be a benefit to us when they're doing other types of supply chain application implementations. Understood. Appreciate the feedback. Thanks again. The next question comes from Dylan Becker with William Blair. Please go ahead. Hey, guys. Appreciate you taking the question. Maybe wanted to kind of dig into the data approach as well and how that relates to kind of the platform expansion opportunity. As that continues to compound, Chad, how do you think about the potential to address additional stakeholders here, kind of drive deeper layers of automation across the supply chain, and how that unlocks further wallet share momentum by additional potential monetization areas, if that makes sense? Yeah. It does make sense. And I think it just points really to the power of the network that's been built over time here and the ability for that network to exchange increasing amounts of supply chain data for our customers. And even this enablement program we did this quarter, expanding the ASN document for this particular retailer is yet another example of that. So I think the network itself, from a technology standpoint, the vast amount of participants that we've been able to add to that network are both growth drivers. And over time, I would expect that we would find more and more supply chain data that we're able to exchange across that network. Okay. Great. And then maybe as a function of that as well, too, on the analytics front, how should we think about again, I know we've talked about in the past that being a function of kind of retailer willingness, how that ranks to your prior points on kind of prioritization of investments? Is that something that has to have kind of greater point of sale adoption first before that can happen? Does one have to lead the other, or can they continue to be supplementary or complementary as you look to kind of accelerate value there as well? Thanks. Yeah. The analytics product is really getting into this deeper collaboration between the buying organization, the retailer, and their vendor community and the ways that they can streamline the overall supply chain by having access to that point of sale data to help them further collaborate. I think the data itself is what's important there. The point of sale technology itself, we don't really see as a barrier. It's more about driving that deeper collaboration and willingness to share the data between the retailers and the suppliers. Great. Thanks, Chad. The next question comes from George Kurosawa with Citi. Please go ahead. Hi. Thanks for taking the question, and congrats on a good quarter. I wanted to ask about kind of follow-up on TIE Kinetix. I think you've framed it as building a beachhead of customers in Europe. You want to do some learning in that market before you kind of invest in the go-to-market resources there. So I'd just love to hear kind of how you guys are thinking about the European market opportunity today. Yeah. I think you summarized our approach here in the first year of owning TIE Kinetix very well. That it does give us this beachhead for our fulfillment business. We have had a Salesforce for analytics product in Europe for several years, but TIE Kinetix really gives us that beachhead for the fulfillment market. As we work through our post-merger integration, it certainly is a benefit to be actively participating in Europe with existing customers that we can learn from, being in deals, understanding the competitive landscapes, and also understanding any sort of unique requirements that are specific to Europe and the European landscape, all which will influence our longer-term thinking about go-to-market strategy for Europe. Got it. And then just one follow-up on this large enablement campaign you called out. It sounds like layering on a new type of communication rather than, let's say, an add-on product or net new connections. Is that a kind of expansion motion that you think is maybe repeatable with some of your other retailer bases? Yeah. I would describe it as certainly part of our business model. I mean, we certainly are expanding customers to the network. We're also constantly expanding the number of connections that those customers make on the network. And we're also striving to expand the scope of supply chain information that they go across that network. So all of those things are growth levers for us. And I think this particular enablement program was large and demonstrates how that expanded data and type of data across the network can really benefit our customers. Great. Thanks for taking the questions. The next question comes from Joe Vruwink with Baird. Please go ahead. Great. Hi, everyone. Just on the quarter itself, can you maybe talk about some of the drivers of upside just relative to your original guidance? I would imagine the enablement campaign, just given the size, that was probably an unknown contributor out of the gates. The quarterly revenue beat you put up this quarter, it is a bit more than usual. So I'm just hoping to dig into the contributors there. And then just going back to Tide, was better contribution from Tide a part of the upside? Sure. Sure, Joe. So overall, feel really good. Very strong, solid business performance overall. You did highlight, however, this large community enablement campaign that we've spent a little bit of time talking about. That did drive part of the beat relative to what the expectations were. Where you'd see that come through is in one-time revenue from testing as well as in the wallet share as it relates to the existing customers adding. As it relates to TIE, that performed very close in line with what our expectations were. Okay. Great. Then I suppose it's a good problem to have when you operate the biggest network, and so retailers come to you for these campaigns. But it has been the case a few quarters now in recent history where the ads have slowed. I'm just wondering, is there a certain point where that starts to impact the growth algorithm in the sense that the landed new customers, they're not around a year from now, subsequently growing connections? And so the wallet share contribution starts to moderate a bit? So what I would say the beauty of our model or our network is the fact that there's multiple ways in which we attract new customers, and there's multiple ways in which we drive additional revenue from those customers. So if we just take each of those buckets, if we think about community, in general, community drives additional customers, usually smaller-sized customers, onto our platform and onto our network. We've talked about some of the differences of this large one. Let's just put that aside for a moment and just say, in general, that's what we tend to see with community. And nothing is different with our expectations for later this year as well as in the future and the opportunity we see there and the general mix of how those come in. Typically, nothing has changed within our view there. We also, through our channel sales, that's a great way for us to get some of our larger customers, usually when they're making an ERP change, as an example. In that case, it will impact the customer count, but in a much smaller amount, and it will have more of an impact on that wallet share because they happen to be larger customers at the time they move over to us. Those plus traditional sort of marketing campaigns are great ways that get us new customers. Then what we've seen is once we have those customers, over time, they tend to increase their revenue with us or our wallet share with them based on connections and how they're using us. That can be existing products using us for more trading partners. It could be more documents, more activity flowing through on the fulfillment. It could be additional products, services, and offerings. So long-winded way to say within our network, all of those are contributors to our overall growth. And then in some cases, that will translate into more customer growth. In some cases, that will translate into more wallet share. But the combination of all of that, and because there's so many different components, gives us that conviction and that confidence in being able to grow at that 15% or greater for the foreseeable future. Okay. That was a great answer. Thank you. Again, if you have a question, please press star, then one. The next question comes from Mark Schappel with Loop Capital. Please go ahead. Hi. Thank you for taking my question. Chad, in your prepared remarks, you highlighted the ongoing investments that organizations are making in supply chain management. Today, the company is very strong in EDI, specifically in retail, but it kind of is a relatively small part of the overall supply chain software spend. I was just wondering if you could just talk about some of the potential natural product adjacencies that the company could get into to maybe capture a larger part of that spend. Sure. So I'll say that I think the current execution against the business model we have and the products we have and the continued growth of the opportunity for all the various growth drivers in our business that Kim just mentioned is a tremendous opportunity. I would say maybe over more the mid- to long-term that there's potential areas where we're already involved in our customer's business process in terms of collaborating with their trading partners and fulfilling orders, where there may be technologies that we could buy or partner or build ourselves that would be complementary and helpful for our customers. Some examples could be around the shipping process, the transportation our customers are involved in, other types of information other than the purchase order exchange process around supply chain documents that we do with our customers, all of which would be examples of further areas of supply chain where our network and our unique go-to-market approach could be helpful for our customers. Great. Thank you. That's helpful. Thanks. I'm showing no further questions in the queue. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and have a wonderful day. You may now disconnect.