SPS Commerce Management Discusses Q1 2014 Results - Earnings Call Transcript

Apr.24.14 | About: SPS Commerce, (SPSC)

SPS Commerce (NASDAQ:SPSC)

Q1 2014 Earnings Call

April 24, 2014 4:30 pm ET

Executives

Stacie Bosinoff - Director

Archie C. Black - Chief Executive Officer, President and Director

Kimberly K. Nelson - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Michael Huang - Needham & Company, LLC, Research Division

Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division

Richard H. Davis - Canaccord Genuity, Research Division

Patrick D. Walravens - JMP Securities LLC, Research Division

Scott R. Berg - Northland Capital Markets, Research Division

Bhavan Suri - William Blair & Company L.L.C., Research Division

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division

Bradley H. Sills - Maxim Group LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2014 SPS Commerce Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's program, Stacie Bosinoff. Ms. Bosinoff, you may begin.

Stacie Bosinoff

Thank you, operator. Good afternoon, everyone, and thank you for joining us on SPS Commerce's First Quarter 2014 Conference Call. Joining me on the call today is CEO and President, Archie Black; and CFO, Kim Nelson.

Before turning the call over to the company, I'll read our Safe Harbor statement. 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 that 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, 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 and adjusted EBITDA measures, including reconciliations of these measures with comparable GAAP measures. And with that, I'll now turn the call over to Archie.

Archie C. Black

Thanks, Stacie, and welcome, everyone. We had a great start to the year. Total revenue grew 22% to $28.9 million, and adjusted EBITDA was $3.9 million. Recurring revenue grew 23%. The trend in the retail industry toward omnichannel continues to create a huge opportunity for SPS Commerce. Many retailers are now selling products through multiple channels, combining physical commerce in their stores with digital commerce across web and mobile platforms. The ability to provide a seamless shopping experience for all consumers across all of these channels has made the retail ecosystem more complex than ever. Consequently, suppliers and retailers need to work strategically to meet the needs of the omnichannel consumer. Whether it's helping to drive traffic to websites, executing fulfillment needs or making pertinent product details accessible to consumers across all touchpoints.

To give you some perspective as to the magnitude of these trends, Forrester expects online retail sales in the U.S. will increase from $231 billion in 2013 to $370 billion by 2017. Suppliers and retailers who adapt to omnichannel and crack the code first will have a significant competitive advantage.

SPS is at the forefront of this evolution and in a unique position to help suppliers navigate these new waters. We have been able to take the priorities of both suppliers and retailers and develop one solution, creating a genuine partnership between suppliers and retailers. Given our leadership in the retail ecosystem, we've spent a lot of time and resources innovating around our platform. Last year, we developed an industry standard called RSX, in which suppliers can integrate to their trading partners quickly and easily, enabling faster expansion throughout their trading partner network as their business grows.

For example, Brooks Sports, an international supplier of high-performance running shoes, apparel and accessories, needed a solution that could implement their trading partners quickly, as well as accommodate their needs as a growing company. They chose our RSX standard and started with the implementation of approximately 40 trading partners. And because RSX easily scales, they continue to add trading partners as they grow.

We're also seeing momentum across our analytics products as retailers and suppliers are beginning to collaborate more closely than ever before. With our analytics services, retailers and suppliers can jointly drive higher sales, reduce inventory levels and enhance loyalty across all their consumer shopping channels. One of our analytics products, Shared View, allows a retailer to share a common view of POS and inventory analytics with each of their suppliers. This enables retailers and suppliers to view the same data in the same format as the retailer to help drive their business, enhancing sell-through, optimizing product assortments and improving forecasts.

Shared View is sold through enablement campaigns in which we partner with retailers to on-board their supplier community to the service. These enablement campaigns feed our viral network, providing us warm leads into new customers, and upsell opportunities to existing customers. For example, this quarter we launched the Shared View enablement campaign with Advanced Auto. Advanced Auto was looking to increase sales and improve margins and inventory turns by sharing POS data with their strategic suppliers. So we hosted an enablement campaign on behalf of Advanced Auto, and now buyers and their suppliers are able to utilize the same analytics application, ensuring they're on the same page in the discussions. This is part of a broader supply chain initiative to bring more transparency and vendor accountability within their supply chain.

We also have our enterprise analytics service, which enables suppliers to apply POS and inventory analysis across multiple retail customers. By aggregating and analyzing data across multiple retail relationships, suppliers are better positioned to optimize sales and inventory performance across products, geographies and sales channels. While the omnichannel movement has opened the door and created more opportunity for change in the retail ecosystem, our solution and powerful network affect gives us a competitive advantage over other solutions. Because we sit in the middle of the retail ecosystem and capture large amounts of data through our network, retailers and suppliers are turning to us as industry experts. We believe we're in the first inning of this movement, and there are a lot of exciting things to come as retailers and suppliers work together to meet consumer needs.

To help shed more light on how these changes will affect the retail ecosystem, we will be hosting our first Analyst Day on June 3 in New York, taking a deeper dive into the omnichannel trends and the key role SPS expects to play in the industry. We hope to see you all there.

With that, I'll turn it over to Kim to discuss our financial results.

Kimberly K. Nelson

Thanks, Archie. As Archie mentioned, we had a great first quarter. Revenue for the quarter was $28.9 million, a 22% increase over Q1 of last year and represented our 53rd consecutive quarter of revenue growth. Recurring revenue grew 23% year-over-year. The total number of recurring revenue customers increased 9% year-over-year to just over 20,000. Wallet share increased 13% to $5,220. As you look at these 2 metrics, it's important to remember that they work in concert with each other, and it's really the mix of the 2 that we focus on.

Total operating expenses for the quarter were $19.1 million and represent 66% of revenue. Adjusted EBITDA was $3.9 million compared to $2.9 million in Q1 of last year. We ended the quarter with total cash of approximately $135 million.

Now turning to guidance. For the second quarter of 2014, we expect the revenue to be in the range of $30.3 million to $30.8 million. We expect adjusted EBITDA to be in the range of $4 million to $4.2 million. We expect fully diluted earnings per share to be in the range of $0.02 to $0.03, with fully diluted weighted average shares outstanding of approximately 16.8 million shares. We expect non-GAAP diluted earnings per share to be in the range of $0.14 to $0.15, with stock-based compensation expense of approximately $1.3 million and amortization expense of approximately $720,000.

For the full year, we are raising the lower end of our guidance. We expect the revenue to be in the range of $125.5 million to $126.5 million. We expect adjusted EBITDA to be in the range of $16.9 million to $17.5 million, keeping with our approach of investing any upside back into the business. We expect fully diluted earnings per share to be in the range of $0.13 to $0.15. We expect fully diluted weighted average share of outstanding of approximately 16.9 million shares. We expect non-GAAP diluted earnings per share to be in the range of $0.62 to $0.64, with stock-based compensation expense of approximately $5.5 million. We expect amortization expense for the year to be approximately $2.7 million. For the remainder of the year, you should continue to model a 40% effective tax rate calculated on GAAP pretax net earnings.

And with that, I'd like to open the call up to questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Michael Huang.

Michael Huang - Needham & Company, LLC, Research Division

With regard to Shared View and maybe some of the enablement campaign activity around that, could you share kind of what you're seeing out there in terms of interest around kind of running these enablement campaigns for Shared View and kind of ultimately how that drives the number of retailers to share more POS data with you, if that has any relationship to it?

Archie C. Black

Yes. Thanks, Michael. It has a real strong correlation. We are seeing a general trend in the retail industry, for obvious reasons, for retailers to start becoming more collaborative with their suppliers, and also we want to hold them accountable. You need to actually collaborate to be able to hold them accountable. We are seeing great interest in being able to use our analytics tool, and the way it works is we are able to -- if a retailer gives us all of their point-of-sales data, then we give them Shared View for free and then the supplier purchase it. We're seeing tremendous opportunity and more and more retailers willing and able to share data.

Michael Huang - Needham & Company, LLC, Research Division

Okay, got you. And is there a way to just kind of a ballpark what the incremental pricing would be with your supplier who wants to take advantage of Shared View?

Archie C. Black

Well the pricing is by trading partner, by dollar volume. So it's much more dollar volume-driven than anything else. So it depends on the size of -- it depends on the size of its retailer. A larger retailer is going to have more sales, and the larger size of your relationship with them. But it is a meaningful upsell to an existing customer.

Michael Huang - Needham & Company, LLC, Research Division

Okay. And then last -- the final question for me. Just internal -- in terms of the general amount of enablement activity that you're seeing out there. Are you seeing anything that suggests that we're going to have a better enablement campaign activity year, this year versus last, I mean, is there anything in the environment that's perhaps driving more of that activity versus what you've seen historically?

Archie C. Black

Well, we've been -- I think the one trend we're seeing is we've been pushing the omnichannel trend, and we're doing multiple product enablement campaigns. For instance, when we talked about the Advanced Auto, we actually did, not only point-of-sales enablement, but also an integration EDI-enablement campaign at the same time. So we're seeing more multiple product enablement campaigns. So we are seeing a strong amount of enablement campaign activity.

Operator

Our next question comes from the line of Tom Roderick from Stifel.

Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division

So first, let me ask the first question. Michael just sort of hit on it a little bit with the question around enablement campaigns. And maybe looking at the numbers here in a little bit more detail. So the recurring revenue stream seems to be remarkably consistent with where it's been organically over the last several quarters, at kind of 23%, 24%. It looks like the onetime revenues kind of dipped here as far as the growth rate goes to maybe half of what they were last quarter, which could be either amortization or could be testing or enablement campaigns. Anything unusual going on within that number? And how would you sort of encouraging -- encourage us to think about the onetime given that recurring has been so consistent?

Archie C. Black

So one thing to remember, Tom, is that on our analytics service, there's either no or very little onetime fee. And in an analytics enablement campaign, there is no testing option. So there are no testing fees, they either sign up for a recurring revenue solution or they don't sign up.

Kimberly K. Nelson

And then I would just continue to focus as it relates to recurring revenue. You are correct, there's 2 components that are nonrecurring in nature. There's the amortization of setup fees. And longer term, our philosophy is we want to actually charge as little as possible on a setup fee, we want to minimize that point with the customers. We obviously need to cover our cost. But there is that amortization of setup fees. And then you are correct, there is a testing, and depending on the type of enablement campaigns, will determine how many customers simply test with us, and we get a onetime fee. Or in many cases, we have an existing customer that we end up getting more revenue from them via an enablement campaign. But that will show up in the recurring revenue versus a onetime testing fee.

Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division

Got it. Okay. And in the past, Kim, and I apologize if I missed it in the call. But you have given the data as to sort of what percentage of new bookings or new revenues are coming from both analytics and the channel. Can you give those numbers again?

Kimberly K. Nelson

Sure, that's a metric we share on an annual basis. Last year, 16% of all the new business came from channel, and 15% came from the analytics. We are seeing very nice traction in both of those areas -- continued traction in both of those areas into 2014.

Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division

And pricing-wise, are you still seeing roughly a doubling of ASPs on the analytics front?

Archie C. Black

I think that the pricing has been very consistent, yes.

Tom M. Roderick - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. Last question for me. If you're willing to share the number of sales heads that you finished at, at the end of the quarter. That would be very helpful.

Kimberly K. Nelson

Sure. 197, so up 7 sequentially.

Operator

Our next question comes from the line of Richard Davis from Canaccord.

Richard H. Davis - Canaccord Genuity, Research Division

This is probably more towards Kim, but I'm just -- when I look at your business model, it feels to me like you're generating, is it right, 60% incremental margins on the new dollar sales? I mean, if you just look at the gross margin, it's 70%. But you might have some salesman involved in it. So my point is, if that number is close, why won't this put big upward pressure on our operating margins as you scale? And then I know you have investments and stuff like that. But if this thing's -- if you ever decided to slow this business down, well, I mean, wouldn't the margins explode upwards or am I missing something in the model?

Kimberly K. Nelson

As it relates to EBITDA margin, you are correct. There is a lot of leverage and scaling within the model. We are consciously focused on reinvesting back and adding as much as we can back in sales and marketing to go after the very large top line opportunity. So where that translates to is the concept of just an incremental margin expansion back to the investor on average on an annual basis. But longer term, we believe those margins are sort of low- to mid-20s.

Operator

Our next question comes from the line of Pat Walravens from JMP Group.

Patrick D. Walravens - JMP Securities LLC, Research Division

Archie, can I start sort of a very big picture and just ask if you noticed any changes at sort of the macro level in the quarter?

Archie C. Black

I did not. I think there's a continuing trend towards retailers and suppliers really working through the new world order of e-commerce and omnichannel. We're seeing more multiple product enablement campaigns. That's probably the biggest things that we're seeing.

Patrick D. Walravens - JMP Securities LLC, Research Division

Yes, so one other question that I got a number of times during the quarter and I just didn't know how to address it was whether the weather would have any impact on your business.

Archie C. Black

It does not, especially on an ongoing basis. So that doesn't make a lot of people in Minneapolis real happy when it's super cold for long periods of time.

Patrick D. Walravens - JMP Securities LLC, Research Division

Yes. And then the follow on to that, that I got, and I wasn't sure exactly what the right answer was, was, so how did they price exactly? Like how much of it is transactional and how much of it is subscription?

Kimberly K. Nelson

As it relates to the integrated product of roughly about 75% to 80% of it is a fixed fee, primarily based on the number of connections or trading partners. And roughly 20% to 25% is more transaction or variable-based.

Patrick D. Walravens - JMP Securities LLC, Research Division

And -- but you don't never seem to have sort of the overage issue that we've seen with other stocks that have that transactional. So is there just less variability in the total number of transactions, or why is that?

Kimberly K. Nelson

So as it relates to the transactions, just to be clear, the transactions are not based on GMV or dollar value of goods, the transactions are based on a purchased order, an invoice. Each of those would be a document or a transaction. So that's one thing to keep in mind as the way we price. The other thing is, we purposely have setup our model so that we scale, as companies scale. So for example, if their business grows and they end up getting more purchase orders from a retailer, for example, there's a natural pricing model where our dollars will increase but the dollar amount per transaction will decrease as their volume grows.

Patrick D. Walravens - JMP Securities LLC, Research Division

Interesting. Okay, and then, Kim, I think I just missed it. What are the organic growth rate in the quarter?

Kimberly K. Nelson

23% recurring revenue growth.

Operator

Our next question comes from the line of Scott Berg from Northland Capital.

Scott R. Berg - Northland Capital Markets, Research Division

I guess my first question, Archie, is have you seen any change in the buying environment, maybe over the last 1 to 2 quarters in terms of how customers in different segments are looking to buy your different solutions? More multiproduct sales in the front side, it certainly seems like you're getting some traction from the enablement campaigns. But any real differences there, maybe from the smaller customers up to the large customers, any trending differences?

Archie C. Black

I think the big trending is on the retailers doing more multiproduct enablement campaigns, which obviously translates into customers then consequently buying multiple products. But outside of that, I think the buying is very, very similar to the past. Obviously, for us, as a business, we continue to move upstream. So we're seeing larger and larger opportunities, and that ends up being a slightly different buying scenario than a smaller customer. But that's been pretty consistent over the course.

Scott R. Berg - Northland Capital Markets, Research Division

Okay, great. And I guess last question for me, Kim. Your gross margins in the quarter were solid, but they are down I guess, versus my model and down over the last 12 months or so. With the lower portion of kind of onetime fees and setup revenues in the quarter, any reason why they were down, maybe more than estimate, more than expected?

Kimberly K. Nelson

As it relates in the quarter, it's primarily driven by hiring, so personnel-related cost. When I think about gross margin with our business, I think it’s one that's best to look at on an annual basis. So if you look at last year, we exited at about sort of 69.5% with our gross margin last year. And as I think about this year, I would expect our gross margins this year to be similar to last year. So the impact you saw in Q1 was more just driven by the timing of hires versus than anything else.

Operator

Our next question comes from the line of Bhavan Suri from William Blair.

Bhavan Suri - William Blair & Company L.L.C., Research Division

So just a broader base question, first, on the analytics offering on sort of the Shared View here. There's a ton of data there, and it feels like, to me, that there's a whole host of analytical applications, especially that it's more predictive prescriptive type just like what we build here. I'm just hoping you could give thoughts on where you guys think you're headed in that direction and sort of how you view the broader analytics opportunity here? Because you've obviously focused on analytics, and there's just so much. It's a very data-rich environment, and so sort of just how you think about that and sort of maybe build versus buy as you think about it.

Archie C. Black

So I think there's a lot of opportunity. We have an awful lot of data. Get it capturing, normalizing, queuing and storing the data is not a minimal feat, especially when you're doing it across hundreds of retailers, all who define things differently, all who you need to fully understand their business. That is not a small portion of the task. The way we look at it long term is that we have an analytics platform which will have the data, and we will have applications, which we have today on top of that platform. And we will longer term, allow people, if customers want them to, to be able to build applications on top of SPS Commerce. Because there's so many different ways they want to look at the data, and there's so many different things they want to augment the data with. So that's our longer-term strategy so that we can fulfill all the needs of all the customers, which we just would not be able to do on an internal basis. So much like Apple would not be able to build 34 different weather apps that you can buy on their iTunes store. We feel the same way. We'll own and control the meaningful and the most core applications but allow partners and other people, including customers, to build on top of our platform.

Bhavan Suri - William Blair & Company L.L.C., Research Division

So -- and that's good, Archie. So I guess my next sort of question around that is, so the SIs come with a ton of domain experience, and you better start to work on the SIs. Have you exposed this at all to them and are they starting to work on this or we're still pretty early on this?

Archie C. Black

We're exposing it on integration products, and it's one of the things that's driving channel momentum. We are not yet on the analytics side, but would expect that to be an occurrence that would happen in the 2015 year that, that would be -- start gaining momentum.

Bhavan Suri - William Blair & Company L.L.C., Research Division

Okay. And then just a more tactical question, I guess. GXS was acquired there and just sort of have you seen less of them competitively at all? Or has that been relatively consistent with historical patterns?

Archie C. Black

We have not seen a significant change at this time.

Bhavan Suri - William Blair & Company L.L.C., Research Division

Okay. Okay. And then internationally, just an update on sort of how that's coming along? Obviously, with the existing suppliers, generally, but just some update on how you're seeing the international expansion in Europe and other areas come along?

Archie C. Black

Yes, so I think internationally, we look at 2 different marketplaces, primary marketplaces that we focus our time and energy on. The first is Asia, and that we look at that primarily part of North America supply chain and European supply chain don't see yet at this time a lot of activity out of the retailers. I think longer term, we'll have that opportunity as the retailers start to look at their own supply chains. And so that area and region continues to have momentum. And we continue to invest and grow the number of suppliers there. The one thing about the number of suppliers there, it's a little misleading in our financials in the fact that there are North American suppliers that have components of our offering in Asia but it gets counted as North America. So we're seeing nice momentum in Asia. In Europe, we now do business with about 5 dozen retailers. We continue to build out the network. We continue to add suppliers on that network. And we're seeing more and more activity on the analytics side of the business in Europe. So nice momentum on both sides, and continue to make progress.

Operator

Our next question comes from the line of Jeff Houston from Barrington Research.

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

With the $135 million cash on your balance sheet at end of the quarter, could you provide an update on your acquisition pipeline? Are you seeing valuations pull back a bit in your target companies? And could you provide a bit of color on the areas that you're most interested in?

Archie C. Black

So I think our M&A strategy has been relatively consistent since we went public. And that our first and primary objective is organic growth. We think we have an incredibly large organic growth opportunity, and we think we can accomplish our long-term goals organically. Having said that, we'd obviously like to make acquisitions. What we look at is, when you look at our business, we are looking for things that are in the bull's eye. Typically, customers or competitors, we're acquiring customers from our competitors, or some very closed buy functionality. Like the acquisitions we've done in the past. And we will -- we're very selective in the fact that we can't acquire anything that's going to take our eye off the ball of organic growth and we need to be able to pay the proper amount. Sometimes private companies have grand allusions, they see multiples that are unrealistic for where they are at. So we haven't seen, when we're out looking, valuation expectations change from private companies. Usually there's a long lag between what private companies think they're worth because they don't see their stock go up and down every day. But we're actively -- we continue to be actively looking consistent with what we've done the last 4 years and are going to continue to be very selective.

Jeffrey L. Houston - Barrington Research Associates, Inc., Research Division

Great. Then following up on the sales headcount. I think you said there was 197 at the end of the quarter. What are your plans to grow that for the rest of the year?

Kimberly K. Nelson

That will be very consistent with what you've seen from us historically, with the approach being we will continue to add as many salespeople as we can while still delivering on our EBITDA profit expectations that we have established and in line with that, incremental margin expansion on roughly an annual basis. So you should expect that we'll continue to add salespeople throughout this year.

Operator

Our next question comes from the line of Jeff Van Rhee from Craig-Hallum.

Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division

I think most of mine have been asked. Just a couple for you, Kim. Where are we in terms of churn and how has it changed in the last couple of quarters?

Kimberly K. Nelson

Churn stayed very consistent around roughly 12% on an annual and the dollar impact being about half of that. So that is not something that really has changed. That stayed quite consistent at that. Again, customer churn, roughly 12% annual.

Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division

Got it. Got it. And then just in terms of all the layers that sort of make the build for your ARPU, and the same for where your customers are coming from. Anything beneath the covers in terms of what's driving the ARPU gains that was notably different to prior quarters?

Kimberly K. Nelson

I think what we've seen in Q1 2014 is similar to the context that we would have given in 2013. So nothing different from that. But just to reiterate what that is, there is a concept that as suppliers grow, they will sell to more and more retailers and require more and more connections. And the way our pricing models work, our revenue, by default, would go up. Then there is the analytics business, so product upsell opportunity, as well as the channel sales team that gets us in front of typically larger customers than our average customer side. Those 3 areas impacted our ARPU in Q1. And again, those 3 areas where really what impacted our ARPU growth rate in 2013 as well.

Operator

[Operator Instructions] Our next question comes from the line of Brad Sills from Maxim Group.

Bradley H. Sills - Maxim Group LLC, Research Division

You've had some real good success, I know, with the SI channel around -- your ecosystems around different ERP vendors. Can you comment on which ones you're seeing more traction with? It seems like that part of the business is getting momentum here. Any one ERP ecosystem in particular that you're seeing traction and why?

Archie C. Black

It's really across multiple ERP areas. NetSuite continues to be strong, obviously, NetSuite has a lot of momentum in the space. Our Oracle practice, our SAP practice are strong, our Sage practice and our Microsoft practice are the primary drivers at this time.

Bradley H. Sills - Maxim Group LLC, Research Division

Okay, great. And then just one on analytics. I know the focus has been on working with some of the mid-sized retailers to get the point-of-sale data integrated. Can you just comment a little bit on your progress there please?

Archie C. Black

Yes, we are seeing momentum there. We are running enablement campaigns and we're seeing a definite shift towards retailers being more likely to share that data. And I think we're capitalizing on that. It's a slow shift, but it's a steady shift.

Operator

Ladies and gentlemen, we have reached the end of our question-and-answer session. I would now like to take the time to thank you for participating in the Q1 2014 SPS Commerce Earnings Results. This now concludes the program and you may all disconnect. Everyone, have a great day.

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