Sean Mansouri IR, Gateway
Mike Willoughby CEO
Tom Madden CFO & Chief Accounting Officer
George Sutton Craig-Hallum Capital
Ryan MacDonald Needham & Company
Mark Argento Lake Street Capital Markets
Call transcript
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Good afternoon, everyone, and thank you for participating in today’s conference call to discuss PFSweb’s Financial Results for the Second Quarter ended June 30, 2019.

Joining us today are PFSweb’s CEO, Mr. Mike Willoughby; the Company’s CFO, Mr. Tom Madden; and the Company’s outside Investor Relations Advisor Sean Mansouri with Gateway Investor Relations.

Following the remarks, we’ll open the call for your questions.

to call like to now would turn over the Mr. I some introductory for comments. Mansouri

Sean Mansouri

Thank you, Holly.

our further, like guidance, this I following go estimate, forward-looking we Before would anticipate, words forward-looking non-GAAP identify the are project forward-looking statements. harbor The than Investors facts in to used metrics believe, All relating certain and statements. other as similar to The remarks intend, the forward-looking to statements. statements and target, statement. can call statements typically PFSweb in presentation well will, expressions disclaimer as conference expect, in historical are confidence, safe concerning this the be filings make other used full website found under of section

on will XX, A through for in of well today’s call I’d in be be will consent at available rebroadcast XXXX provided at or tonight. expressed is the available Eastern press of like pfsweb.com. via as retransmission August to written PFSweb, the webcast strictly p.m. release replay available this way, Company’s without X:XX prohibited. redistribution, also website as any replay everyone link starting call, remind the this Any

to Willoughby. Chief to call the Officer, Mr. Executive Mike like over I’d Mike? Now turn the

Mike Willoughby

the Prior overview Thank highlights, financial of the results a for you, I you to and you. want afternoon Sean business and details good state everyone. brief operational into getting of the to provide

in incurring certain unexpected XXXX. in taking client-driven Our resulted Russe Charlie. ultimate Charming PFS as amount notable during of These of well and on certain as retail another the have a quarter working first recently headwinds network of liquidations overcome is the and short-term the capacity combined excess bankruptcies fulfillment more in client business to aggressively is bad-debt. our client Most situations impact Charlotte

potential we in PFS brands approach strategy, and year with growth growth last targeting with a core began marketing, mid-market focused sales proven RetailConnect on investments product delivered CloudPick offerings, a in our marketing results pipeline. featuring sales plan positive high PFS implementing and and our our new verticals, increased However, dramatically

is shaping and in existing the one of ever expansion year relationships This be PFS. in up of our to new client strongest

of While signed generate XXXX, make XXXX many revenue be equivalent to XXXX, up revenue will first to in revenue PFS the half of new relatively expect year flat we the service in strive the bankruptcies. client the as contracts fee these for lost from to we compared

future, XXXX. good PFS brick streams of contract little I’m client a creating now we recurring client sales Also current As visibility and because provides mid-market revenue with unit long-term greater is very of in diversified near-term the engagements, of and risk. which potential into look the with associated the the retail and business performance concentration pipeline to merchandise brands encouraged our proportion terms less mortar more mix and general and base retailers very this

negative first was I is of being one-off impact which our retail the it in this of important there news to business, year. good call part at felt in PFS I kick overshadowed by an bankruptcies abundance view emphasizing believe of of client our is risk these that the the off

On communicating XX is been we’ve past of to the the the XX sales side, LiveArea over continuing. theme months underperformance

strengthening staffing more the are to clients, with current and well pipeline some but initiatives margins. helping better cost and and We’re activity client new generating client gross to margin gross but recently we performing adjustments for our must of wins. challenged sales mitigate and the from continue be new do other erosion, we Benefits

our significant revenue Manager, hired leadership progress we enhancing Over have the as past our we in segment. in General two months Butler executive Jim focused made this since LiveArea

XXXX. see our our very to we exit and we about are strengthen expect future with excited LiveArea we direction as While pipeline

QX holiday can team slowdown four expected the the the platform incremental a revenue to due at in a especially e-commerce new five months LiveArea’s recognized year. the to considering work of quarter that recognized impact just of traditionally have be time year, last driving on revenue significant is to in new slower Our for

continued As new relative our quarters, the a start result, project of LiveArea our our sales we of team currently shortfalls to year. over while is couple negatively rebuild impacting the the the at expectations anticipate XXXX next to in sales new which worked outlook pipeline,

performance units decrease as combat of and to terms we savings will In the for operating costs, shortfalls efficiencies. overall you year-over-year business drive as look continually we corporate a opportunities the see compare cost in

at realize from journey both at and There challenging XXXX point for yet long of the is promise business short-term term segments we big in Looking are picture, current much us the an dealing and time investor perspective. we Company’s very harsh whole, a as outlook. lower the our financial a I the with so the at same have are which Company to year, realities caused

but a XXXX, very clearly in feel XXXX. in are for period We transition optimistic

shareholders ourselves, the I our to driving Tom current want future. to financial top bottom we and improved I share know and results underperforming price. pain fully large As the you of as committed too line depressed just and to look result feel overall that we

and unmatched capabilities We global differentiated a have built needs. for BXC very BXB end-to-end with business both

well grow. as share for great leadership client journey I energized the PFS and hard execution return portfolio, team. exciting to Company capture a continue to LiveArea we and a are we work believe reputation increased to our We and positioned have client solid an market

So consumer we core the and Health our three ACV in first our on a especially as beauty, BXB quarter and year. quarter with in activewear, quarter now, let results The financial quarter to ago verticals. year, half a LiveArea are Tom. contract to and direct premium have bookings CPG back more within we were wins fashion collectibles been few annual both brands. with times expected. line our highlights second higher These jewelry have and for the more we the of record-setting quarter than call second and or headwinds before than for and were PFS pace the engagement share the year the Well, turning sales to new value target me expect over from

LiveArea while soft. strong has had engagement to bookings continued be project also bookings

to both offerings in the ramping new also and We CloudPick. FaaS RetailConnect including make quarter continue during or Fulfillment-as-a-Service strides our PFS

RetailConnect product a we light existing Although our solutions asset just standalone year, indications we have CloudPick introduced other Including these new exploring interest strong are from service bundling basis. accelerate earlier received offerings growth avenues already on proposals each selling with and to this these of and both within and products. multiple

changes a now. in minutes spend few I’ll extensive covering the recent LiveArea

is as of Manager of Vice President strong Executive and Jim thrilled consulting our join partner General in and unit. and as digital to Jim I’m pipeline, addressable priority a Jim’s that leadership immediate we appointed quickly productized him and and we quarter senior in business the revamped new the team brings strategy services assess the will Butler grow be technology and LiveAreas to sales the sales enhance market wealth experience LiveArea and with offerings. our new to a team. go-to-market expand LiveArea seeking During while have

professional expertise new and and to differentiated revenue LiveArea fully companies. they commerce the how marketing, track leadership LiveArea members, are. LiveArea already I’m how marketing records Since we always with digital the end-to-end and services encouraged product great and record and our proven focused genuine capabilities building rebuilt, believed optimistic sales as understand successful powerful companies. be executing plus growth I’m LiveArea’s team digital consultancies our can very LiveArea experts capabilities commerce strategy deep teams’ had and future. about sales, performance, track high of in come and programs with of our hired very from potential, I’ve appointing high PFS LiveArea for market now our to hear Jim’s commerce have and Jim, excitement

commenting and financial over turn further, I’d Before additional our Tom? provide the to the insights Tom to outlook. quarter for like to call

Tom Madden

afternoon good Mike, Thanks, and everyone.

quarter, service For compared fee equivalent period. SFE consolidated or $XX.X revenue to in prior was million, our million the year the $XX.X second

due bankruptcy LiveArea the fee project was business. Charlotte of liquidation by of a which compared to PFS loss compared year services margin and as Service driven related to well gross revenue to the in expected the higher related lower lower fulfillment the decline margin with in technology revenue segment, activity transportation decrease XX.X% to mix percentage from margin had the prior coming With revenues. primarily quarter, higher as revenues Russe XX.X% in and the

in gross quarter corporate and client on also the during costs, The due margins experienced as million labor level on the XXXX costs LiveArea of and $XX.X $X.X reduced was this reductions operating as a and labor efficiencies. ongoing June amortization in LiveArea costs expense increased of to quarter, focus the direct segment an were the declined but we incremental year. a our increase compared prior more part costs million by projects. SG&A in certain experienced decrease offset than certain personnel-related in costs, depreciation and and PFS to cost segments and

From to gross due offset reduction lower in $X.X an partially for the EBITDA overall revenue aforementioned standpoint, cash-based of was in primarily compared components. in generated margins segments, SG&A adjusted to million million the quarter The $X.X XXXX. we by decrease SFE and QX both the

the in million, support and of the financial I to a that reduction cash XXXX excluding year debt XX, closer the expected use of million million. see leases to XXXX. $XX debt would $XX.X XXXX, is for million outlook positive second position my XXXX, the of This position cash -- favorable as cash as flow of clients, to later in capital in of totaled half million heavier compares modified $XX $XX.X operating this June to net a of $XX.X balance of expect the a expectation then million. XX, in cash free net level approximately level $XX.X at cash second to total net year. to current expenditures million $X.X our net debt at a half debt return resulting in a sheet, With the and December would we new Turning to resulting well was year net equivalents a

from stated have certain clients’ received clients. to the from cash our portion our our a we the collections in timing later As of that balance remitted of customers are includes past, cash benefit then the

control. a not under So there is basis, always some which variability on quarter-by-quarter our is

debt. was dependent through currently expenditure capital PFS our new in in a segment. expenditures capital and upon level We spend be between quarter in expect $X.X million million capital approximately million June of to financed and $X in cash million, activity expenditures client $X.X including the $X year-to-date the Our XXXX resulting

in we XXXX we bring -- first quarterly on of of early half the expenditures So rate run to the to a of capital remainder compared the as year clients. expect as incur level higher new a higher

business components results. our segment Now key of let’s discuss

reallocating certain I our remind from Shared segment Before two doing we operating changes direct of last our to by Corporate so, costs the in to want costs of the quarter SG&A presentation units. made Services our business you

reflect our we As units. also and $X This a moved prior-year approach. new this costs high a part business SG&A working from updated million bucket of cost refinement level, we result, the further evaluating per At quarter results our our consistency this corporate structure to allocate quarter to overall of to to is business with unit. approximately of June have cost the

me let PFS that, the segment. an With of provide overview

PFS SFE the service quarter the of million gross compares margin last fee the million XX.X% with revenue in with Our generated margin. gross segment fee This $XX.X second service of SFE of to revenue of year of $XX.X quarter, XX.X%. for

due the high to declined primarily revenue certain SFE was offset business mix targeted As our in of also range including Note, bankruptcy that transition margins update prior PFS on of still Charlotte revenue. the an from PFS clients. however expected year gross last this discussed of Russe compared toward decline the in for accounts, business. to to the impact gross of existing by QX we our partially liquidation, margin quarterly growth lower fee increased client due operated Service margin the end the the

to in offset certain the sales experienced and marketing an partially million facility segment by The all under $X.X primarily direct costs costs personnel and cost in PFS reductions. related Charming increase increase which were reserve Charlie due increased other of and bankruptcy, incremental a absorbed -- operating and applicable to costs,

segment of $X.X decreased a PFS revenue quarter. million the and $X.X cost to As result impacts, prior as compared year direct these the in to the million contribution for

transitions. reduced of generated with LiveArea to gross revenue service quarter second the client client This the incremental gross fee than of million million and to The margin gross a as earned [indiscernible] and the expected were well as well last sales revenue on certain LiveArea primarily gross labor in margin $XX.X revenue June Now costs. to applicable XX.X%. in margin with to product the margin related The on project projects service activity decline by XX.X% as of compares certain quarter LiveArea services due The fee segment, technology as incurred primarily positively higher second costs is of revenue XXXX quarter is fee impacted activity. in decline $XX.X in year. service technology

The a due expense. versus revenue operating and more $X.X gross by in the lower was prior reductions to costs, lower than year, by which and LiveArea costs personnel-related non-billable billion margin direct decrease depreciation primarily in offset both amortization and was

direct As business year. $X.X a increased million of contribution million net LiveArea in the to the as prior result compared of the the above, $X.X to

decrease to the Our second XXXX corporate million costs compared personnel by quarter and $X.X tax-related costs. a related due to of to SG&A prior in the primarily in year, declined

our during approximately second within are our for to July Charlie $X in bankruptcy the was the million earned client client SFE Operations half for segment service of which operations XXXX Mike Total by next year. be two Charming ended services quarter outlook, this the conclude as services from one XX, transition mentioned weeks. on this of half revenue expected the and clients to expected earlier, was PFS the prepaid in XXXX expected [indiscernible] to of filed on more second PFS XXXX. than Moving

and conjunction quarter of and In bankruptcy program second we service this the approximately with XXXX. in $X.X receivables million freight of fee liquidation, reserved

two in service EBITDA adjusted distribution the XXXX SFE challenges we million As $XX and between revenue facilities, unit, a to million the well revenue result our in million. and as capacity these with between bankruptcies now ranging excess the lower unplanned business LiveArea range $XX as expect from of and XXXX client $XXX $XXX million to

the with so complete, are outlook guidance granular segment, position and for for With we in revenue revenue in forecast more With XXXX. of in to our reintroducing similar we XXXX, we to transition the leadership expect million LiveArea $XX be a LiveArea range structure each of that range our to $XXX.X are SFE in million. compares revenue $XXX with million LiveArea to to revenue revenue SFE revenue expected $XX.X PFS fee million [indiscernible] XXXX. PFS service of between million, and to fee service to $XX This between the

the be quarter. As we at in just that service line XXXX relatively expectations overall look quarter revenue outlook, are September our the equivalent with will fee June

result third client lower from increased new a We revenue activity quarter offset revenue to expect see in LiveArea by the a performance. PFS as of

million For to primarily the EBITDA, of decrease operating level somewhat mix to see expense we adjusted a quarter higher expect sequential revenue a between due second the in third $X.X million, quarter $X spend. compared to of to and as

issues. become the mentioned, of client Mike we originally and transition a bankruptcies anticipated, XXXX LiveArea than As of has primarily because sales performance year the more

and XX the months visibility the However, to strong good sales XX give exceptionally bookings revenue associated this recurring PFS anticipated segment. the months streams next us for into

year. provide fiscal update on for outlook As growth in next expect we the turnaround to LiveArea, coupled are a financial well XXXX for we stronger our quarterly into a When the November. our next process efforts planning result, in with

to Mike? my concludes the prepared and I’ll This call over remarks turn Mike. back

Mike Willoughby

Thank you, Tom.

the the sales year ACV worth for then stats combined Turning worth for million XX we to estimated ACV. estimated the booked XX million This or in to in combined engagements QX, in engagements annual quarter. compares LiveArea $X.X contract a $X.X value a ago

million XX compares in projects to also project combined in value. they value combined then projects We million worth project $X.X where estimated XX this booked a estimated $X.X and

and with We the the those revenue our recurring from resulting of benefits good engagement financial engagements. performance continue to have expected bookings annual reasonably

the compared highlighting project XXXX, are first challenges experienced sales value the $X approximately of we project half million continued first project unit. down half estimated by bookings of to in the for business have in the XXXX However, this

personnel I marketing hired with records for we have focused performance, track already of earlier, sales like As and executing mentioned top high proven companies programs revenue LiveArea.

year have record for a pace PFS, are For indeed to setting on bookings. we

in booked a $X.X million estimated with year combined estimated prior quarter. This engagements During three the $XX.X quarter, combined worth in the in we ACV. compares ACV six second then million a worth engagements new

from largest contracting continuing QX in Continuing our more the call, pattern several to our with one in [indiscernible] of sales history. for pipelines while we signed contracts our the services operation and have additional maintain last

we XX the For retainer ongoing end client discrete at and the as LiveArea representing engagements engagement at to project of compared had QX. active QX, engagements, of end engagements, XX client

For had at XX end we PFS, and programs at programs active for as our brands XX of QX. new XX the clients, a sales existing efforts the end QX of active for compared brands to of with result XX

were the platform excited built the Outdoors e-commerce Gander quarter launch color LiveArea, announce Salesforce two for brands, of on on lifestyle To to for new Cloud we outdoor sites provide Commerce and additional our overtons. major

we furniture for In Commerce addition during one of major is Salesforce launch, a workspace. for a modern active accessories the office innovative quarter manufacturer and project to engagements of the this implementation quality the high won Cloud well-known

practices and we and wins in support to clients Marketing to quarter, clouds engaged successes Cloud Commerce this Cloud. and within illustrate LiveArea’s a relationship addition and served rebuild years. the as Salesforce other is implement from cloud we we the key with the continued us lever commerce supported Sales our Cloud addition during Cloud Adding for these competitiveness sales have for for In our ecosystem quarter force pipeline. to the These Service to

America the launched we Sterling to of services on this OMS quarter, North recently for engaged are project, the the Sterling and managed provide implementation supported clients order the client one expansion platform. management of our During in we now

Next, be Asia. out Europe will rolled and in the solution

this features FastTrack SAP rapid automatic fast and and improvements Cloud. Commerce bundled during cost for deploy order we technology delivers analytics. to and platform my SAP include Commerce Cloud. systems Commerce This tax enable and and solution. partner of a quarter, qualified accelerator the is packaged solution services other in Commerce Also Key announced proprietary pre-built effective advanced LiveArea SAP implementation integrations for BXB the fraud management cloud, key updates technologies, and management of FastTrack

had business including BXB consistent with on be unit nice as the wins nearly PFS, that having year opposed of theme spike, quarter more PFS also BXB labor hourly and quarter These tend helping the the from seasonal holiday engagements to recall our to a the Moving quarter, for the scope over BXB to risks. throughout evenly fourth half PFS less the consumer more and clients. our our large direct year and a of to weather labor derisk have help engagements benefit this course the use of like spread

health commerce for shapes an to this brands our and and year becoming within encouraged continues that engagements brands these expansions engagements to consumer BXB a to and beauty beauty also global and and I’m new bundled are operation are to as and spectrum companies new of value of brands emerging same the health existing BXB program showcases such and inventory. or client especially direct engagements of strong same order growth engagement. consumer beauty a be startups having vertical with platform the cash new established direct all to for the consumer widely client companies core of the across services Health trend were This client celebrity service PFS partner sizes, in facility the health beauty to portfolio and with most leveraging brand same and the from direct Shiseido. and premier us brands we’re considered with the CPG fast

on make medium-size CloudPick innovative FaaS or offerings the RetailConnect. our new and initiatives expansion like to businesses solutions new progress our and We continue and this SMBs target year, service small introduced executing to to of including

LiveArea oriented and experience efforts, SMB BigCommerce Adobe the Shopify. as to with platforms SMB such our Regarding continues wins Magento,

to cash care model, While and in of featuring brands. accelerator services, our multi-tenant SMB customer for and market order fulfillment and box to bringing platform tailored out the emerging we PFS are

for a PFS easy the SMB. SMB structure, variable startup an with making reduced Our features fees rapid and accelerator service to to speed market very consume pricing

and seamlessly to growing expect a for PFS dedicated scale and they incubator more an be as this justify to into offering be transition solution. will bespoke enterprise brands, We which offering can our able

accelerator formally in beauty in independent model We will York show at QX new rolling be late out SMB City. an New this

we year, CloudPick. this called newest our Earlier FaaS introduced solution

picking is and featured and for direct center strong have at solution to consumer lightweight cloud-based trade We This or designed within interest industry environment. and shows this their generated conventions innovative solutions distribution several infrastructure brands offering experts. and with management prospects order to warehouse and DC software efficient we’ve existing technology create and fulfillment

of our cash helps multiple very to solution services CloudPick through distribution to and pipeline moving in now. and competitive the I’m This services Bundling recent us capability we differentiator encouraged to direct addition our consumer asset our are us more locating for a proposals, opportunities of our towards instead in to or model clients with our co-locate our facilities us see with one other light sales strong in to facility, CloudPick and to bundle fulfillment move several labor as fulfillment. enables clients platform order in leverage is which a facilities. provide other PFS also to a

We pipeline implementations CloudPick and have mentioned in are or of stand-alone two end three the proposals we bundled earlier targeting including several clients the by deployments, XXXX. the and

RetailConnect, which utilizing prioritize efforts the instead of provides have utilizing rooms in store continue depot while led to clients depot their us of outside their addition the store house for Group, size, stock Property in retailers our space, conjunction RetailConnect with supported addition, any with store store. solution, sales For the prospective to market to Simon solutions we the

the ship packing optimize efficiency picking turnkey technology allows their same using to operation accuracy, and retailers drive includes RetailConnect store, to of within peak especially addition the infrastructure store existing increase during and and The volume periods. solution pack omnichannel PFS the and pick

a pilot target addition With for XXXX. store RetailConnect active store for current Dallas-Fort base We in deployments at early first implementations, XXXX. our we clients, several production will with have discussions now addition QX Worth our first store

experiencing from need our to e-commerce the given is uncertainty will the motivating in This and move Europe U.K. fulfilling U.K. prepare been the we strong to of to At market as brands uncertainties new apart the and as center with prospective and for presence, year, Brexit. Many within current from have Europe EU. region the U.K., in-country into be last the is serviced a in but are U.K. need in-country that fulfillment market momentum Mainland clients likely now the end distinct fulfillment largest both live the went

Our end-to-end you about have prospects streams include into the business LiveArea our I’m excitement have in year. coming services in anticipated visibility our the for PFS the new this PFS U.K., current and and of momentum we sure, the the revenue can the half in online and sense clients. clients we XXXX with back of all recurring

LiveArea in on-boarded growth Jim right to and I and revenue With in PFS as Butler The to and LiveArea those track performance, technology cycle staffed turnaround just sales XXXX. and services by for the effective marketing sale LiveArea digital headed can high return shorter an respond a on will be the unit much experienced, soon direction leaders, to revamp compared believe is agile business nature the team integration with to business. of quickly agency the and services

next are quick disappointed XX call and a return bookings to more our given XXXX. providing our the looking are over down remains Even delivering in pipeline we forward growth the PFS to obviously this we strong We our year-to-date to months. propensity transition near focused will on on XXXX then, and segment our LiveArea, on costs but in the highly our next we detail objectives XXXX, year and outlook for with sales for that turnaround on remain guidance bring in our as weather record managing

build for Thank waters. you patience choppy short as your work term, hard our value for we we to as navigate shareholders the

our investors Tom answer with happy and engage story. to are and to communicate As always our I questions exciting

over always be San LD can Angeles. next But Micro few phone. in B. ourselves make don’t in several if there, see by Conference you New in Los Francisco, York Riley the will us available the conferences including the and Conference months, Gateway There Conference we

open will Holly the call for now questions.


Street first Lake Capital Mark Our Instructions] today from Argento come Markets. with question [Operator will

Mark Argento

created feel mix, for little kind of a better are and are stats percentage to get you I kind to a mix percentage any wanted the you. of know your just of it’s us or now, for headwinds could What mortar obviously the provide customers. I they kind there? guys of data of retailers, bricks some

to model -- little wanted some guidance here talk a maybe bit. could EBITDA talk guiding that kind SG&A, there? down, gross delevering just and the little and seeing margin you more gross seeing related we’re coming down Obviously then, aggressively but And of Thanks. going margin on about bit deleveraging about a revenue what

Mike Willoughby

let I’ll happy be to answer second, the first Mark. the question, take I’ll Tom

associated no think a we’ve with merchandise of prior on focus this have the focus about had a that retail as several virtually bricks it. last over years, been and exit I instead the mortar focus So talking general so on-boarded brands business has two result current and retailers of risk to the to that we that year our sales pipeline

clearly into category. engaging fits someone, We are with careful about very that very who

have really if that retail a that we low we either, earlier. so point. it’s only PFS can but you [indiscernible] pleased look within revenue, business the about would I at I tell think talked regard that It’s that for is retailer. have primarily and that don’t I’m business client And risk brands very core the categorize with those current to at as say I verticals percentage a So, there this you relationship pipeline, large our to sales one the I associated not exposure with

Tom Madden

standpoint with margin a is levels. performance question as SG&A point year-over-year It’s with SG&A your right your of associated you standpoint, of opposed the gross on kind more as business, on. look the on -- gross an leveraging the from from And kind of

that the of we’re some some on of of a indicated the in well of the SG&A to structure well as that side, been done in have a client business the some making I bankruptcy [indiscernible] we cost investments marketing front the reducing in in scenarios. do good We a increases on We’ve LiveArea as corporate business. pretty as comments as our operation segment front job as and our some of have sales result capacity excess that incurring sector as the in my

So we’re throughout go got of in will some to the areas hopeful standpoint but facility the all as and add ongoing we focus under-absorption new an business we as these can. away, from we’ve just client a that controlling costs best mix,

both seen have of business. gross reduction standpoint some margin a in the We sides from

On little revenue. bit side, more the it’s related of a mix PFS to the

a margin the about XX% we’ve as revenue bit at driving higher of talked little look from range. side business to the range at business, XX%. gross the is We’ve for in that year. so operated things So coming got kind fact we the last down of We XX% that’s stream our somewhat that fulfillment

So end still of that that about one-time at push past, of over there projects a and help something very high that talked there. little indicated the that over or kind performing bit like we we are category when that maybe in the we’re range us the top

we’re the business, I growth. So to well opportunities obviously, LiveArea where in but as gross think I standpoint leverage business there’s continue with as little a margin on to that operating forward revenue in it’s about bit, PFS down the feel okay we some go as

you in will, decreases the gross do gross or if side, in the margin as have margin compared to we prior LiveArea year. On some adjustments

a our a of those costs, arrangement. labor higher and to support also to we related contracts is we’re the offset we couple had some of order on towards in driving increased that somewhat year-over-year situations, increased had to client which level to order cost impact specific continuing of Some pricing work then in expected where help and from have

that in again business. we’re So

range. margin Our the in is targeted to gross XX% XX%

end still at down we business operated the for basis, that the again from at upper for leverage there of little bit XX%, leverage But we’re again so We on as where this year, range the business. able were last forward. but a while to that on cost corporate opportunity well going as both segment in an as the within overall is shared structure


next from Ryan come Needham. MacDonald Your question will with

Ryan MacDonald

business changes obviously is would it off project some on sort then you Clearly, liked expand the particularly that the can top to struggles top a year expectations of that bit I or LiveArea it maybe there of have the but guess the a to line star within renewed slower an issue starting you of management the the ahead? of seeing line side sort into of and what or still of speak, that in you’re seeing? more there. sort little of Is fact lead on business heading of so gotten sort generation, of things, maybe

Mike Willoughby

dealing sales Thanks, us. from lead that flow, we around generating sales efforts pressures Ryan, and that our flow with think leads or partners own for that I we’re more inside over and either marketing with even several lead the generate we’re the calls past same conference strategic described

some and on would had through felt leads last the as really we of conference driving to changes and continuing converting just effective more small indicated pipeline changes And to needed call, I to structural order be leads and we characterize too be we at make market in sales is, like problem the the go pipeline. to

small the result of more end start but of smaller than is rate, revenue with the pipeline funnel too then start it the is conversion the At two stream. out you when

not to -- to recruit of him a and able two proven really So opportunity sales that leader got performance months until of record ago having a new know had address that given being leaders chance team programs. track we problem drive onboard our having high we to a basically have an

both management well increase and now leaders from program, the improve hope the to effective leads the I we effectiveness can the as to a quality number the strategy appropriate in so leads. think marketing actually self-generating our that position generating of channel and and we’re attack problem, we’re channel with of as product alliance,

confidence work So pipeline, significant going sales of seeing of they next in the that half to are partners year, we’re rate pipeline year, impact through given that generate is working much not back to should e-commerce a we to to we’re overall in some to the see just be our our really rebuild that going I give the certainly kind the which the obviously be revenue a recognize mentioned, probably because that momentum our able does but now and as continued right beginning increase better in the that opportunities is drive objective. us and result it take market

Ryan MacDonald

problems into new Have where bringing since process? guess regards new LiveArea brought added to that of business at sort net him are we be adding the of heads scale to the quickly hiring or sort that hires with that requisite I is the that heads organization help in the incremental you some done? sort already of to finished improve number needs there And you on, Mike or in of and still

Mike Willoughby

our two that’s at additional At months he sees be priority a the that will the level take to side top opportunity, have staff leadership wants to ago. possible It that on this Jim do new And in on new is very creates. business is been we’ll team the there since some the do much place but we the the we of the revenue think leadership opportunities started things to I advantage level, depending team obviously hires need that of team and the have. where focus

place. So, I team the in leadership think is

Ryan MacDonald

Brexit Can and you looking You whether like facilities you Thanks. capacity there additional a Do can the and capacity you feel add demand that what feel you of in demand you and are mentioned you’re seeing region, of actually potentially. here there? currently or momentum strong about have? to U.K. how address you ahead talk sort invest just with about

Mike Willoughby

It pipeline being Brexit question. year a it’s Now, great on our has been as have all we really off-again. of interesting on-again, a watched based

exclusive I one primary our driver. coming U.K., that’s in I wouldn’t think the that’s of the the in say into drivers although opportunities pipeline

than market take our rather of of a to lot trying to a that it deserves think realizing the U.K. they address are I that from clients directly be care us.

solution. pan-European We’re

have pipeline probably the sort U.K. our in us we now the But, I right out normal capacity of year. towards conversion that of PFS that the rates sales year have tell you if into of see sales next in will end a pipeline we

have in plans. our somewhat then converts would we presents in next the there sales and in be with located footprint so that And more a clients available pipeline opportunity more us onboard to expanding if U.K. year campus capacity and where is our


will Our question come Instructions] next [Operator from George Sutton Craig-Hallum. with

George Sutton

this on James George. is Hi guys, for

just particular relative business? struggling cost-driven look or risk your is kind protect can of list, any place you for there it a yourself strategy As is clients to through you or bankruptcy customer in

Mike Willoughby

Yes, I appreciate question, the James.

Tom more leadership the our I but further, say that the job bit us has of of done question let nice Tom’s really historically, a I’ll answer from would under like bankruptcies. So impact accounting of a protecting to team these kind

XX unusual see It’s Chapter for us to proceed a go to actually client liquidation. then bankruptcy and really into

does all is associated general what merchandise of with is been clients Mark the retailers, risk were. in So considerably. It has risk retail unprecedented. having both left? our one guess asked earlier, these of the we year in this have of twice Argento happened exposure I silver it kind highlight which to lining pretty that question the do reduced

we client the merchandise it’s categorize on have really retailer business as mentioned, side one not the I a As could large only general and a you of client. PFS

we’ve think seen of done I brands that we as decrease, targeting efforts we these retailers. are bankruptcies unexpected a So work that and as marketing sales result our dramatically and risk the certainly continue versus

the being continue to risk clients about on by that to So that very minimize selective we look board. we’ll

away we targeting been we brands. are targeting for that going mid-size to we’ve year, larger mid-size specifically mentioned in engagement, an brands particularly but thing certainly is nice because not opportunity other our that our commentary we turn The been this

risk. We’ve last previous that years, year helps onboarded than count also year reduce overall or to a and our higher client this client concentration

I of is in core of PFS for the a think vertical So these especially more thing, that markets smaller business. the clients, health better

Tom Madden

in financial through So process of larger in go credit new the concern. industry or potential of where terms a is winning a there alluded as are Mike and bringing of areas some we pretty we back on thorough kind for of clients project advance threat aware obviously a to,

work to with it’s all we’re business. their client ensure their we standpoint, operation the to are kind we as them So page really -- expectations but not we monitor those what try important us on only for -- standpoint quite from a as partner closely. with also from an to closely, of far And the for financial as that same

type reorganized to We So a our Chapter XX process we they see on that when, what daily basis do generally as alluded a monitor things into Mike a you AR just closely monitor, obviously and goes and if and closely. client is a the generally one the go-forward through particular e-commerce their business of strategy that, ongoing support favorable on our key of is client times a that basis. so manner often because to treated for in were and component capabilities

XX more but it that into related Chapter the us to we’ve The all is happen issue scenarios turned the also time, year helps our doesn’t that this have so in It positioning. liquidation. had these fact

business forward. because, of getting the So the is e-commerce demand liquidating position in the ability the and cycle going stronger ongoing reduced to ourselves have paid the don’t strategy they’re for

George Sutton

of then And we color new client that impacts wins some from more quantify here we you provide on maybe should can [indiscernible]? XXXX how the could some expect these

Tom Madden

we’re ready this too to much. don’t I for don’t year. want give to want not to I guidance -- give

new information value contract look client I that. we’ve provided estimated the ACV regards in to take quarter in what that or wins and both you annual do and associated is provide first can can our quarter second with a at think an the you the we

that the to able won, be that be is run to we’d then a -- a the in we following value. of be receive to would the that in that expectation year our at And portion equal client approximately year revenue rate ACV and generate activity

with of of that will million of we see next you’ll year. in associated So at report, we close But new this look generated ACV contracts again, expect in the we’ve rate second we those run some would quarter’s as to million in alone as got be $XX $XX that quarter contribution that XXXX. look

client changes for strategy of our et there look wins applicable just entail we always there. consider So because here The to business when then occurs and of that growth and offset would is pattern, that new kind client obviously opportunities growth we this client existing cetera. churn some at

the will the and seeing business, are that for from these up we’re traction we client and that process the the of budgeting things the of comments feeling heard very to from about setting order you our we’re So those together we hopefully the upwards. net today, go XXXX the in forecast. wins I think kind three visibility kind of visibility get But, good ourselves in

George Sutton

to RetailConnect, the customers depot, more comes is in kind then solution let’s prioritize than getting you there When one in space depot? kind I of the that from could. if more over And guess I where it Thanks. potential rather particular to that interest guys of anything store you’re the

Mike Willoughby

Yes, market we it were pointed available. various we intended bigger part in of just store stockroom just talking retailers the were that to the -- we opportunity to the space addition, path being store were and out having was discussions, offering, that to always depot from to us brands lead our discussions getting so turns which followed and the faster we the really more we was had the be detailed immediate opportunity addition the that store like felt as more

than to best wanted And their rather particularly a buy pickup the a It’s store and that store surprise. addition. wanted in drive store online talk bit depot to addition of do to associated traffic with about

but of on the addressable staff, I any the infrastructure stockroom actually put need constraints the store the small that their a think and because when is to space that a and we the and locate is market able about eliminating to for solving thought in addition burden size the we larger retailer by for store retailer that problems space. it’s has store appropriate putting opportunity footprint

the management platform All that and the of for we capabilities orders. platforms really routing ours to got purposes require omnichannel an platform, all which is order in that they’ve or that willing they have built-in use e-commerce the have their

take of we’ll So care the rest.

to certain So the a they cases RetailConnect the bigger available positive us in others. and actually takes depot straight might still to have really in I have depot then leverage have think solution, want addressable stock and to rooms store retailers that it’s where hybrid It and market development. the their we

RetailConnect as period operating in our around pilot see opportunities multiple in area. how I clients is, within addition evolves, mentioned our holiday commentary, coming be pipeline with that that’s my we’ll that encouraging to the Dallas-Fort thing engage store sales in Worth this here will current So the during but current


the now time, for question-and-answer session. remarks. back to I Willoughby And Mr. turn our conference like concludes this would at closing this to over

Mike Willoughby

as in today like XXXX I’d you. specifics look investors and more analysts. we we the outlook. that we if forward look Thank call seeing we forward conference provide November We our mentioned you’re earlier, attended look quarter as And the and you, our in thank with there. and Thank one of our Holly. on to you third to report to speaking results everyone to


gentlemen, does And today’s this ladies teleconference. and conclude

may disconnect lines Thank You you participation. your your at this for time.