Sean Mansouri Investor Relations Advisor with Gateway Investor Relations
Mike Willoughby Chief Executive Officer
Tom Madden Chief Financial Officer
Zach Thomann General Manager, PFS
Jim Butler General Manager, LiveArea
George Sutton Craig-Hallum
Kara Anderson B. Riley
Mark Argento Lake Street Capital
Ryan MacDonald Needham
Call transcript
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Good morning, everyone, and thank you for participating in today's conference call to discuss PFSweb's Financial Results for Second Quarter ended June 30, 2020.

Joining us today are PFSweb CEO, Mike Willoughby; the company's CFO, Tom Madden; the General Manager of PFS, Zach Thomann; the General Manager of LiveArea, Jim Butler and the Company's outside Investor Relations Advisor, Sean Mansouri with Gateway Investor Relations.

Following their remarks, we'll open the call for your questions. I would now like to turn the call over to Mr. Mansouri for some introductory comments.

Sean Mansouri

Calandra. you, Thank

those further, remarks go the conference like through make found of harbor statements. to other available XX a.m. XX:XX this Reporting future company's Before in written and performance forward-looking statement. I statements. section following results Including available that starting website forward-looking PFSweb are concerning historical The this Financial morning. prohibited. to Many in to the the as than expected words we the company's typically link Eastern replay non-GAAP operations. today's facts would will disclaimer A related statements like well rebroadcast intend, the call is replay identify remind forward-looking to used expect, estimate, target, relating believe, filings presentation used forward-looking guidance, confidence, everyone consent and the as certain project can this The in are full Any well be or as PFSweb and via also the press August safe strictly in express on I'd our way will retransmission anticipate, be this be without of will, pfsweb.com. other metrics to statements in similar provided as at at expressions this of website release redistribution, any under call webcast of call for statements. available

Executive the of Mike? to Now Mike over Chief Officer I'll the turn call PfSweb, Willoughby.

Mike Willoughby

and time. Thank you joining is I you, for early at hope us Good everyone healthy. Sean. this safe Thank morning, everyone.

have seen the from to the we quarter, since COVID-XX momentum second of the During continued e-commerce benefit we the onset pandemic. strong

fee robust. shopping digital We volumes, in QX adjusted EBITDA. on and fulfillment revenue generated reliance consumer equivalent records remains As service

we diligently our strong momentum durable and growth these units we pandemic the compared worked X% for raising business. for the are total grow year, expect our as PFS the ensure a be meet this to XXXX company Buoyed of our tailwind are revenue demand by compared range our tailwinds both continue surrounding we to demand. been increased teams XXXX. can guidance conditions LiveArea to entered uncertain, the have and to clients XX% e-commerce to And consumer business has and within in to heightened to SFE Although

of levels appropriate Now retail due online peak holiday habits. hit QX. closer high center portfolio taking client and buying June, ensure at level within near as the contact In experienced we remote picture To QX, look a and online we activity stay began May our the reopening service ground jewelry, record in COVID-XX beauty in key experienced levels clients particularly effectively health staff demand shopping order e-commerce demand a verticals, economies teams April volumes expanded centers. in our levels of growth our and the closures. consumer to our Though this teams and mandates core to home drove distribution activewear at elevated to Consumer be remained across goods. amid demand, had in and business, PFS online packaged to added consumer and as continue various brick-and-mortar in shoppers we

company e-commerce generated our history. Mother's these related of traffic May, volumes fulfillment elevated highest into Day Going levels in

prospects the contending uncertainties. and In communicated initial LiveArea, as we're forward. last all be call our be on the in We as holiday related QX season, which are start in with update, using experienced still PFS we expectations on momentum we as analysts of QX for many this digital to most provide more our softness time. corporate and holiday the some demand strongest at will the project Zach a will going color and delays benchmark environment bookings prepare to predict COVID-XX on later of

these LiveArea. we as as Jim date. we in in to more be course, the -- We discuss will to through have what have still optimistic well. the our pipeline momentum to later close about of we're sales progressed of work quarter to LiveArea do believe developed strongest we the engagements LiveArea to but However very call

Before that working fulfillment Tom, want support continue this to to environment. employees with I work have outlook. to moment volumes and COVID-XX their frontline to results especially the and on thank take we from difficult over Tom? pass our record working clients operational are a call small a a to safe the turn grateful this our I it that and working Tom our details point centers employees. am XXXX most With the as to cases fortunate to over to our number provide dealing that, very financial among am during I more in and very they across hard our grateful for up our employees time. globe I'll management to maintain continue to we complications I incredibly QX significant of our

Tom Madden

you morning and everyone. Thank Mike good

last quarter Following financial quarter otherwise financial of comparisons of brief. all the XXXX. structure Unless comments to second are I'll keep our quarter's noted call, the second

be online Service expanded segments to with consolidated late Fee quarter XXXX increased PFS was segment, to or as of of guidance XXXX continue our to XX% the the expect order well these volumes double-digit PFS and gross from LiveArea due consistent gross Equivalent XX% margin LiveArea. a relationships our SFE the by half Service the engagement mix. the client project through revenue remain decrease driven in XX% fee in XX.X% benefits XX.X% ranges to of XX% slight XXXX. to of and fulfillment revenue for new for primarily bookings higher million activity Note that we as due and And primarily XX% in to and early QX second to For to $XX.X within growth compared second and range our XXXX. margins both in

both call in added we With center resources and have operations. our the increased fulfillment PFS activity,

full-time contractor employees to our opposed team primarily went employees as job operations through as controlling Our we us helped which ramp-up PFS period did a of this costs. hiring good in

programs, including of pressure However with have there. million the seeing on DCs, ongoing of we were we begun supported certain XXXX year labor will in so SG&A impact the second the compared to COVID-XX some costs quarter within government monitor modification and compensation primarily million stock-based our million rates $XX.X the and certain with by million of expense to our variable compensation continue by activity quarter the increase $XX.X year-to-date. personnel offset driven impact increased policy of adjustment and higher which a partially increased marketing million of yielded a the vacation during $X.X $X.X favorable to expense $X.X approximately last sales

last least we across higher social to volumes our well. our next fulfillment quarters as COVID-XX amid we enhanced for at sanitation as quarter, so mentioned and continue few the that Additionally DCs, expect require distancing measures

million to million continue doubled these $X.X compared operating than revenue to as strong other ago to the in more well the leverage will policy. We the to quarter costs vacation and prudently. of as the growth manage quarter due with with improvement $X.X coupled EBITDA year second Adjusted the in SFE modified in primarily, impact

in At and totaled leases to $XX.X and June This operating position a million. XXXX results net debt million $XX total balance cash XX, approximately Turning was debt of excluding cash $X.X million. equivalents the sheet.

one service the update, of utilizing remain last position program of we is receivables liquidity the navigate in the as this our transitioning expected with credit component on our and change away Overall, market conditions our from our for surrounding offering. client confident we current pandemic. clients, increase corporate debt highlighted a was quarter card this who net primarily collection to the As due

of expenditures capital a the $X.X funded million, in Our were through in second $X.X approximately was million, quarter $X.X lease debt and which resulting million level financing. of year-to-date

We The related of is our continue to expanding $X footprint new to client and be existing between be expected expect client and support to to $X growth. to DC to CapEx our million. new which XXXX activity majority million

our to all our including do continue in two subject higher given course, COVID-XX, change interest XXXX calls, We revenue, other a These product originally addition the past amid expense. on to uncertainty expect also are tax maintain to of and to expense we report expense, these, expectations for G&A and than of expectations increase to are, outlined their business, price. majority of increased they with anticipated positions. of stock-based our the as impacts clients expense our clients' compensation segments share comfortable of currently we vast continue with both of operations varying our XXXX and COVID-XX on financial in closely as the result a work overall manage we our cautiously for Across feel

base have requested our payment short-term these clients the as and we them and unprecedented where overall While of partners partnership committed our payment direct helping client with timing in view has good are receivables. regarding helps and spirit flexibility to of adjustments our in contract terms. potential we contract clients which terms can during to times retail risk. exposure, credit mitigate We our limited Several brick-and-mortar our

outlook. XXXX let's Now our move to on

We consolidated we year, the improvements of be to continued in believe and some ongoing last EBITDA raising demand an light we pipeline, poised On of now prior also as discussed update, the we for our range both to revenue were expectations on to in consumer segments up the segment we for point high time. to adjusted heightened In area XXXX, I that and SFE focus are PFS continue our mid in tailwinds continue that our single-digit our of the our previously range in only expecting positioning. to strengthens XXXX expected our trends rest driving quarterly live from with growth. robust X% to backlog are in and growth at expect XX% Coupled compared of for business growth our for costs, margin. to see of corporate the

dynamics April, Mother's the it These play consumer holiday peak and QX the to related of volumes very another that broader how be market best the in of a uncertainties expect of today host year GDP challenging it Day. uncertainties and growth the have we from was to still unemployment, economic economic down we level don't benefit evolving the surrounding predict out fulfillment experienced expect nor course see we would do like Given of is our estimate remain, other QX confidence, indicators. but given to of rest

support ago. turn Additionally, to Zach? costs This growth our various highlighted of remarks. operational we incremental holiday my moment as outlook upcoming people segments, season highlights order we client call including concludes through incur prepared This our to Zach and recently prepare I'll to investments and walk new put in year us both business the over our in the a a in business expect center fulfillment infrastructure and to in full announced gets for PFS. XXXX. to

Zach Thomann

of proud to has Tom. teams protect to exceptionally measures operations our buying purchasing. as their which our unwavering shifted were In beginning pandemics specifics the how managing for share COVID-XX were focused customers our to able back-end clients' and since quickly, rapidly and am work and of due on employees e-commerce changing the last safety our our call, Thanks, COVID-XX, and environment we our health clients, earnings to the global on team behavior employees. to digital I our commitment done scaling

XXXX. call, by and during higher rate and in volumes. of e-commerce brick-and-mortar work of for Mike the the in channel up quarter earlier across we the and and able We ground holiday ramp programs a would online As period, teams. QX time to typically quickly we dramatic their were retail to shutdowns programs elevated the be for experience PFS that outputs This shift global facilities home mentioned record pushed to fueled case ordering our the the PFS' volumes our of mandates. year the of respond fulfillment to the unexpected, in volumes shopping quarter, rapid end the demonstrated many operations in busy experience stat back client digital hard exceeded allowed much level scaling to second to this reached and a Thanks

continued During we fully staffing center for has a work home customer geographies us fulfillment members. recruit, move levels our program. care model, and model all provide in team The increased across quarter, existing to we customer a from to our and which home allowed our the ramp facilities care contact center at virtual the to increase

with our benefits, and to distribution distancing able to our were the strict center on to with teams in when mix the importantly, we from to environment currently build on-site and we safe to integral model, especially we sanitation access remain Most home have ensured operations. of a are expect hybrid post-COVID [Indiscernible], We virtual work experiencing, a to contact as work model that social a center PPE, continue standards agents. move

ago million Moving four quarter. the engagements, estimated ACV of to with with combined the annual contract in year to ACV QX six estimated million $XX.X new $X.X sales, we an value in new booked engagements compared or

on any our technology corporate work they to softer their as highlighted as make for fulfillment COVID-related through As uncertainties. prospects last reluctant changes update, in bookings operations warehouse QX, were anticipated we to

the from continue to initiatives. become on and since added XXXX pickup to a in direct and end see have prospective new this with nice QX on we However, to bookings prospects We clients focus channels. pipeline to of consumer our focus June, in acclimated the the anticipate more renewed interest normal quarter as a

Regarding foot the X,XXX footprint and daily output Dallas of our square fulfillment a ahead lease on total our season. center our increase capacity new DC footprint, holiday we American in improve which a recently Texas distribution facilities center area, will North to six signed the

soon demand isolated add for heightened is more the not to U.S. expect European e-commerce we capacity to Additionally, the our as operations

pass of footing to enter half reports, fixture We of consumers' there Jim? We effectively many past years believe acceleration overview will shopping globe. foundation over become outlook, as couple operational as ahead. respect to demand an experience, consumer our adoption provide a the that us operations. remain shifting we solid e-commerce our of scale I'll a Although permanent with call navigate undertaking Jim uncertainty our our an expect of industry the LiveArea's now on over those citing e-commerce are for the investments second future and we to we we XXXX. now, the degree the of road has operations believe are of for for to the across

Jim Butler

most I'm XXXX last of call. and growth yet XXXX, sales of we sales the record resulted announce bookings that the in increase largely we in happy Zach double-digit bookings that generated quarter LiveArea, everyone. and Great. from our solid by Thanks, another QX backlog recent QX driven our good morning, shared record to in QX and on QX with

to some related in our initial softness discussed uncertainties. sales conference COVID-XX delays and did May due we experience As in call, project bookings

to throughout momentum us This track for concessions XXXX. the their client growth digital our capabilities However, pickup on the and LiveArea's trends. up response picked quarter to and allowing in into QX ramp offset July experienced strong in return as largely in finish delays and June prospects began shopping online we to project to

their we the opportunity developed a found our by business and IT firm COVID-XX that strong strategies and years. are long-term digital In market also broader further trends May LiveArea are of in over offering seeing and and marketing result of present comprehensive terms infrastructure looking of numbers the market study services investments of increasing commerce to as our outsource that was are activities. research in the opportunity of independent in couple These their what support digital next managers conducted prioritizing IT a a for LiveArea and

that remains during spend to To thinking COVID-XX such few for be in ultimately XXXX and will intact. believe overall as have distractions assist strategy successes. are fortunate commerce of in the We with growing Despite XXXX. larger our extremely us we with the proactively of capturing talent our portions our capabilities senior a clients unprecedented highlight and these investing been extend and our will times

continued expanded our with seen growth capabilities marketplace redefined practice. channel, our clients from consultation to have include platforms, commerce, and partner newly OMS delivering strategy new products elevated successfully a and We and through strategic work extended multi-cloud interactions our technology by our

in transformation In is the addition, in awareness we made which our critical projects. consideration for larger progress commerce brand significant

media crops traffic leadership example, webcasts own development with and led the and with led website work is several opportunities. have awards. and content the to And LiveArea promote to has to efforts papers, our marketing pieces global Our Barry, increased white for of

that see to XXXX there our against to be progress strategy momentum we the the in are fueling is While business. continued our work done, much is thrilled

sales our to results. Moving on

our are one refresher, efforts in results that retainers between typically digital than marketing As are are in three duration and a less years engagements divided spend which year or agreements project-based typically one services sales to duration. that managed

in to the QX, in LiveArea XX $XX.X $X.X XX for a value. This estimated million compares million projects project quarter in then combined booked project For projects where we they worth ago value. estimated year combined in

This LiveArea or $X.X also year worth to in the worth estimated engagements then ago million ACV We a booked combined Annual XX million Value ACV. XX in in in $X.X compares Contract estimated combined a quarter. engagements

in that both leading are in in our for combined indicators year. to the of LiveArea in revenue keep million estimated the types bookings So despite of for the sales mind bookings ago in streams compared a then Please $XX.X our to pandemic we million growth in the QX quarter. helpful total half $XX.X business of LiveArea and of future well-positioned driving continue are back year

high and about expectations. Mike? is our to remain all-time remarks. environment well-positioned of optimistic and for As operationally we're navigate and an back QX. June strategically Mike demand we I'll to it heightened out mentioned both our as July, over deliver XXXX and his turn We new now of our coming on at pipeline momentum enter this Mike closing

Mike Willoughby

you, call improve this Thank that internal wrap-up serve to And two Jim. have I we wanted and before we to on to partners briefly how support initiatives teams. retail organization-wide our quarter this taken our touch we

purchased we both reveal new share we more mind, work which deeply. ages formal have and several they U.K. this and the behavior with firm and specific them responsibility of our all new consumer our Gen-Z research we will patterns information clients have the U.S. found to willing we as Among demand help and today's meet all consumers their explore differences in patterns as become rapidly that the to millennial partnered that understanding even needs consumers, U.K. of with geographies client evolving generations and the for to they this values we across this online the broader in their strengthen compare our have improve we raised this segments. expectations can the pandemic we We also period. independent amid insights, categories understanding and further with studies consumer of in optimize of partnerships us to in of in products help environmental during key behavior pandemic. And have U.S. shoppers. clients online shoppers. customer's buying when With proactively Leveraging retail other brands to consumers brands conduct respond especially online focused of on working our during an And to regarding business all research online Research been Arlington across First, that shifts witnessed ourselves. more operational consumer quarter,

Our environment. with new disruption with for research consumer adoption digital showed of safety delivery. Go innovative varying and And and exciting shift will a experienced also the drive permanent new strategy all CloudPick. we've and clients. buy of omnichannel delivery of toward expectation. our local sustainability and efficient, channel as emergence consumer to the as this clients safe prototype is can in of the options experienced store expects The extend of to LiveArea the we varying in developed has view pickup conscious into to solutions an and to PFS Scan enable consumer a respond enhanced and cost-effective of with that provide have solutions our consumer in combination trend product a expectation, And This shopping with as product rapid which help to sustainability on responded as including or demand of Go impact whether Retail have respond and curbside are one our period clients Also and with degrees our online meeting fast, and This cost-effective efficiency, offerings to who we curbside with consumer behavior. environmental a equipped a Connect strategically very Scan post-COVID from collaboration store, Connect type operate reduced retailers Retail impact strategy and goals. Brands effectiveness. expected profitability intersects online, this in services behavior degrees rapid and provide probably practical extension and experiences delivery operational likely for our local well an

admission, firm, across FWI the the and organization Second for in across protests FWI approach advancing have a further time as supported have us initiatives overseeing I a the social through permanent to Work inclusion CEO assisting to by efforts and change that our of help this country, in or inclusion phased inclusivity the our us these engaged communities. will history. the wake personally company and permanent action is and allow develop our consisting Institute team advocate nation's approach, to for for movements organization. us we listening members at global pledge enact awareness diversity three action of Future our change a recent phased and greater within further and signing diversity our foster among and am these pivotal social consulting within I

comprehensive the remain we both customers. long-term. benefits workforce our meet consumer and will clients' the and inclusive diversity about from have an behavior optimistic their needs this of Looking and of inclusion And our market we diverse in near understanding to ensure and ahead, environment needs the a initiative and

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

We ourselves by and chat. are make to happy phone video available

will you now We presenting open then. questions. and and and XXth virtual the with X-Part Xth the the Calandra, speak call We Advisors be to on on some of we’ll hope meetings August September conference conference for XXth. during up gateway holding also


line our Sutton from And question. first Craig-Hallum. from with of the question Instructions] [Operator George Please proceed your come will

George Sutton

of pipeline Guys, the learn very business. Thank of to it's encouraging of on sides you. resurgence opportunities both the the

of you Can health to comments, than early from time about an are set in and of So you interest we nice of hear. normally out beauty. talk a you expanded about all do course broader breadth customers? you that Mike, talk laid breadth, verticals seeing your the

Mike Willoughby

are across we certainly organization. the George Well,

of and list on ready-to-wear this difference same activewear. with time sort on particular fashion LiveArea, we would fashion markets luxury a to think we general total broader vertical there's beauty out say as health set verticals COVID-XX not have PFS, the the faired we and I and period a categories and side that So of well within see of We jewelry fast between fashion, split just types we of LiveArea apparel I from product strength because this in or different sales include within probably we have traditionally the activewear have overall the in continue PFS nearly when the as we collectibles. during than side. where and

As you activewear those imagine, really out leisure activities might this just enough have period. are And and people who or hunting also during the as working have wear to activewear accelerate using some at done continued even around of purchases. home interestingly, things like that well

So experience kind wanted a And as make addressing. product categories to that that bit. that expect some categories to recently we're even non-hardgoods services-oriented we and that that put vertical talking George the little that maybe wanted expand more we LiveArea around markets of some categories would we into with be product had hire But last continue week, of additional frankly, is just some at the would specifically also moves we'll oriented that out to we sure about you new as LiveArea met likely we most expand. looking

George Sutton

to in win pipeline a it that pretty at It's while you're fair ability right all-time Now does the of is Is are full that clear the that, your that at pipeline. your pretty it? combination as year, confident look a reasonable for amount the increase the to way suggest look highs, of in the DC you It's at plus of we hirings doing footprint. the a remainder now footprint.

Mike Willoughby

overall the to and reasonable Yes, LiveArea kind to our And exit started pipeline high to that during in this sides. that pipeline even I the convert half that is QX, as after into so this down. on year, on backlog build we were traction now our we they that that regained initial all-time of strong we the have partially mission XXXX. a characterize, most where of resurgence starting we would the that's going period both revenue – value as side have I as pipeline to started deals that leading recognized occurred and and can to is we quickly pipeline dramatic where slowed XX-day QX was can things as and up the realize that softness month to people into back very catch recognize the closed of think that to

of to rates team. effort kind as normal Steve sales through And pipeline. far It early as a just to results far and the flow back scale bookings started we'll has occurred are end bit XXXX. that see or entire the encouraging his failures really to QX the see more or We up anticipation conversion decisions that for where closing deals key in the that's And that to to they've wake towards about a that, of as the So little been but of rebound. realizing PFS it's within as similar pipeline clients QX, Coy they we're disappointments need are issues, of took where make and QX starting had little hear longer that.

is this seeing on. announcing you than we'll I there. as expect have more to impact to And also in up going get show those higher information George later better the close But as those so on point at XXXX have around might resurgence expect, we we're impact bookings for a from and an QX do XXXX. rate a to results

So our on have expectations to And for side XXXX expectation, a our on we performance the the going largely clients. remainder of continued they're over holiday. big is have PFS are the with based

George Sutton

are with on would about, investors the One I probably IPO. allocations IPO this occurred could that this But commerce this with how week. really in can call, you The commerce other disappointed talk thing, and be market? big their in big targeted Many Jim. to work if you

Jim Butler

definitely them, in partnering them a your commerce an commerce us of do been essentially to momentum is -- offering, standpoint, So quite lot platform next bake-offs We've means behind really see is the head commerce have with anything, the sometime more -- a implementations. And is take really to with could the lot differentiate that you for that. could unique Sure. be in the U.S. strong experience level client the be that them We have the allows still consumer They and EMEA. seeing appear what now. a in And there headless experience that what can or engine or right? sees from the and to here platform

So of we're the Last have about were partnership with year year really excited them. them. the we with we partner that the

tells they especially I they expect excited like happy I'm But you working continue into would And how with very them. partnership, arena. much will the and move blossom, it for this IPO us. to So as

excited to a have great continue work they think And we're offering. I them. with to strongly

George Sutton

Jim. guys. Thanks, Thanks

Jim Butler

George. you, Thank


line Kara question next Anderson the comes Riley. from from Please your proceed. of And B.

Kara Anderson

Good guys. morning, Hi.

Jim Butler

morning, Good Kara.

Kara Anderson

So that April. to can peak levels, year-over-year post-Mother's of April we quarter, I June looks a growth kind really trends specific the But say, the the what heard fulfilment Day? color or it little saw you you get around like hoping bit more within in

Mike Willoughby

Day or had was of at not Zach think I in hesitancy Mother's especially I'll at knowing more color, to about certainly Mother's the if continue. bit a we would our going call week Sure. trends general off in having before, because And we When we were was be the comment. that let, was then, little early knew increased it time time big that right as some think we last COVID-related a that I May, different And make maybe volumes holiday, I'll geographies. projecting that past-Mother's chime that continued with think drop Day Day would really if, occurred. conference a in

consumers fact close stores volumes, that think to were during promote their to result to stores, after in May, clients [Technical even I with for was Difficulty]. our Day, even get back out saw we reopening Mother's really what in were largely continued so And strong continue and hesitancy

started And June to might we And although decline. see May. little into then we of headed little normative And consider the through and a so we store a end with into bit a at of what that more openings, June, even July. pattern additional a of into continued as bit

any So add? do other want you to color Zach, you have

Zach Thomann

the what's this future, Yeah. in commerce QX in we've the to we on into as mentioned demand the some And And forward in we that, it as obviously into Mike a adoption call. in out by go increased brick-and-mortar channel, I our QX and re-openings and even with Only really environment. is because even is see but the the and closures, that up. look think to we expect ease that's as script of the lot current called guidance benefited fuelling there's given we obviously was,

we onset it but at look QX the our was midterm. that. more just forward, are obviously a now behavior, us, the But a that lot the record of in So, lot is early primarily a closures for shift volumes at consumer we we driving see look in as it least of belief

Kara Anderson

point, talking pretty you're And a that here. bookings. And if you've on mean kind seems those QX. your trends year I conservatism kind guess, if might me already I business comments, concentrated? like where about pipeline the of it And say look to at good I of But highlighted for guidance. in of balance that's the true, against like strong you that's some be there would

Mike Willoughby

year at look and remainder what There's So the happen. as for like. interesting, of you could range holiday especially what wide to were make the -- Kara, plans it's might trying to because, a we to expected we the looking imagine, as

But think a everybody's pulling we could are on And with you closed have middle just other on where the then of sort at probability we're money their out a if a see holiday we bell a could ground. stores you very see wallets about people again. right end don't Because or spending end, of either of expectations. depressed it sort curve, completely blows we're that holiday middle so maybe concentrated tail consumer out looking just disappointing if the and away a is the in high at and

the account I around use We around year. just think at would of instead have and that government how that look we uncertainty as rates that. half conservative to factors as the back also still word to to for unemployment of deal of a prudent I especially lot be such fact programs the there's with

sort middle now you therefore of be -- that pattern, activities than revenues I say that a would revenues a ground. I demand and we overall as as holiday we COVID-related have bump. just above fulfillment expect strike think with we far so a all expected we seeing a to would pot. typical prudence have coming And the throw more strong level would QX as a record not volumes. in in And as and would that holiday that the would QX we're on And at probably QX, sales certainly what its based with really same QX then fulfillment expect probably but

And so and in moment big during we're time preparations for taking this QX make holiday. to investments certain that

for QX may while and Tom about our and we adjusted as a the and it's that we of some seeing prudent And QX, will we just are we're we bet up digital saying. based we're investments a EBITDA have preparations between really talks on big probably and placing impact the but feel the those all analysts revenues the on what see like so make data holiday. of all kind year, expectation That's bet as a remainder

well distancing Monday retailers to fingers in the which this big hoping clients clearly extended phenomenon that stores spread be start we're of sit a try for off out seeing not of to Black us. to we'll encouraging and good social holiday make would big need back type we're is that to and crossed. where so doors We're to block to going also have hoping people means trend saying and an outside year. sure where to earlier also Cyber Thanksgiving And the for everybody to to tense not fortunately are before our holiday holiday promote for Friday, that we're we're going start And be

Kara Anderson

queue. very all will the That’s helpful. in join Okay. I back


the Our Mark comes proceed. from next Street line Argento Lake question Capital. of Please from

Mark Argento

Good morning, everyone.

Zach. you some supply any product we've quick one One of warehouse up? stressed. Are at your into talking of companies Just seeing things getting as any when other somewhat with been to issues guys Probably it for ones. chains the ramp sounds customers thing like a are holidays couple the

Zach Thomann

Thanks, the Mark for question.

some Q&A time. segment. apparel phenomenon saw bit QX. that we largely in the And think saw talked we that I early a impact about we at the think But little in of it I

and impacted COVID-XX a China As really lot of Asian first. suppliers

kind the side. the year constrained of the supply side of So we chain on front

ease seen As we up considerably. progress through QX, we've that

haven't up pipeline we and chains the of around seen product that the supply for and Because ahead as really that. So constraint shared diversified much teams manufacturing products.

our but bit little impact and a seen in nothing an impact terms forward. of from some partners have material thinking of that vendors go of would We a on procuring assets our

Mark Argento

And then helpful. one think I That's just is for Jim.

through better you In terms lack kind of near-term direct that, is e-commerce relatively beef to of What What are platforms. that benign? are dollars of are for benefit the types for more flowing their there infrastructure of traffic projects up you help or seeing word is a portals you guys seeing? more any or

Jim Butler

that technologies. COVID that we order that this management systems us the that's that. the things one strategy as would question. I XXXX, online for expand Yes. to but year, the obviously would our was we last stores to area say to thanks say And thing our comfort that be areas we're year, expected. bet big orchestration And I an obviously for like had the no buy OMS was allows going into idea seeing -- hit the of of developed the

those So technologies. allowed to it really benefit our clients from

seeing would I the more a So, we're momentum in. area say bit that's that

helping balance seeing business, into year in investments should as of lot get where they in underinvested opening As they well we're in our considering through mentioned momentum the clients seeing what and I as my of as understand be strategy really of and lot a so a definitely we're they XXXX. the

Mark Argento

for last one here in to cash one. of does the as leave you're are back year thinking business. a take Where of just the you things CapEx through Tom And from surge sitting kind guys of the that perspective guidance out? advantage investment free helpful. penciling flow that's as the some Great, you

Mike Willoughby


go As we we free it at on expectation it credit range But around lot of breakeven. collection are I of is and year. within from forma But of would impacted that flow business. one today card through standpoint, basis the that reason as take my take look obviously cash cash us. the look have is a activity be be today flow the going rest a amount that a we're look at of that we the at But by being as would client a uncertainties from We're we to free in pro for the some that year. that generated a transitioning we reasonable full a the as

range So, $X call situation in so of and flat if if $X cash -- would it be call for slightly to in I'd number year. probably the of one take free I pro or out, positive I normalized million client that let's million it flow the forma back to the

Mark Argento

Thanks it. That's Great. everybody.

Mike Willoughby

Thank you.

Tom Madden

Mark. Thanks


MacDonald from the Instructions] Please Ryan next [Operator question Our comes proceed. line from of Needham.

Ryan MacDonald

don't of into to fourth talk on into quarter we we customers the you're here. as maybe of Congrats being want about to now able this quarter. what I year. making everyone. that periods with fourth morning Can of shifted address volumes? look preparations heightened far some fulfillment with jump ourselves elongated guess you be your too Good I excellent Amazon But out quarter an Day to Prime ahead see

Mike Willoughby

about made more thinking and Zach sort their distribution footprint if Sure. to point. we the just of mind Amazon's a to of we're I center announcement prep during the we and do say about on over a products I general a talk the and how then of that sort earlier. crisis And marketplaces provide that some an and COVID to elongated indication that. color sites Zach of come that Jim expecting I'll that general. clients news new for on bit I shift helping in to and would about inbound little constraints I'll reasons wouldn't there's holiday mentioned think are then But to comment something Corresponding like on

we're color in operations the geographies bandwidth more closer preparing they're for their move to looking provide And more point. into side are where creating helping facilities. on We Zach, you clients of to some just our to across at also delivery want it? inventory do

Zach Thomann

Thanks Sure. Mike.

the holiday of we And that. of an QX is we recently we're of what have that -- all metric announced up correctly center inside opening and be and expectation are ensure DFW ensure is really meet elongated our the facilities QX store working really execute have period plan a run with into as network the QX. European as going goes to that around investing theater we we assets demand highlighting and that with that increase in set we our expected the center can we're of implementation operations of side How reach indicating, ensure that ensure right those below period. as as we and carrier so the that opening is PFS to the we just to inside the we'll facility. in to capacity headcount there's part level ensure delivery our folks the partners to front same for ensure mode to full we're QX available then area to each underway the relates the of a and fulfillment was just capacity to Mike that's for quarter other Mike into customers layout homes, and can packages considerable in to all the QX, A it fulfillment that that that of in the the around that walls capacity have expanding the have at of the to expand it amount in the ensure highlighting four work quarter work now. or was As our the post that planning level the of we appropriate things all shopping near expecting high really levels trend continue in to That's well frankly that

Ryan MacDonald


Jim Butler

around Mike's real another seeing of LiveArea is side. big point, to made to XXXX the And marketplaces. Yes. that which start our items just quick materialize one really on We're bet in definitely we

not to to but a site, deploying participate marketplaces. technologies personalized brand So in allow have also only brands

that. provide really maximize continue. So the in that ensure we now brands we holiday And that the anything to invest to not to continue find they bandwidth our period beyond the to trend can that services expect but only

Mike Willoughby

finish a most our most certainly about dramatic finish to real on. I lot to did into virtual of benefit our clients really of we where customer agents to -- how in model. change we home that see about think where most does in of having of our And respond out we QX a a mention going a contact take to question. where But so, where We operations that that to for in not is into physical have of and and Ryan center want scale in offices and necessarily saw prep with up order is center calls. us and we're a planning open we QX just just from the also opportunity Ryan more talk rightly the our QX it because expected fulfillment our work volumes to lot work care and as bring train mode needs, also to people our we contact in to their shift

to so contact I learned the the do via this center of contact interesting one of And our is really it of at see scale via how virtual certainly we're questions, recruiting to And for we replace whole benefits it's in going really really, QX And opens to virtually. interesting how country looking operation up be And the e-mail orders well. are calling how we've mix staffing. this to ask that thing think center and whole chat. customers contacts many

to scale well. in our looking of that part QX operation also we're So as

Ryan MacDonald

fulfillment how look where sort follow-up, means maybe inventory traditional a initiatives guess service point. into existing to about capacity greater mentioned to clients does the CloudPick of And you from Mike Are factor they're seeing into earlier How as helping sort footprint? a RetailConnect a take does delivery -- at say demand of or GL's as comments a customers Excellent. fulfillment an closer this? alternative to to as I you'd this move in the your the end

Mike Willoughby

Ryan. Yes. asking, Thanks for Great question.

be, So local Obviously, we closed U.S. in of lots in saw here thought and I'd say with a COVID-XX deal CloudPick geographies the universally that that almost a quickly then retail was connect. in acceleration conversations, I far a to were And kind various stores are put other happening being and prospects way over to retailers dent the delivery a like chain inventory in August supply bit in you in we really retail that opening, issues. stuck as those as product more crisis an started clients and consumers think simply would as in of QX through just to delivery connect. where that but And would of as sitting where that bit focus we about we locations. had And on pivot little halfway around getting stores really operational saw they we and to particularly brick-and-mortar to how other closures to survive. trying are curbside we were

need prepared in are our look be effectively. consumers and we're going not to more environment to bit And as to to -- behave right is started we're We're a able we're real we so, closures, back to use we we to conversations have things that to fulfillment store the We store around our going differently curbside be And to if new a going And get locations experiences. delivery. normal, have to stores to need much all local to closures, in going if that use a this need within delivery. We seeing inventories increase need as have support meaning have leverage we little normal. centers. touchless to for to expect have even a

yes, So conversations kinds is current with RetailConnect clients all pond of both and prospects.

And We is & place, then prototype I now. focus at from closed that conversations turn right we're My to prototype need moves quickly. That's the at deals. conversation. think offering very that just Scan right the productized I earlier right the Go personal into in the the hope So, time. into mentioned

Amazon maybe buy system. You're POS and where delivery RetailConnect traditional delivery retailers line efficiently. & cost the an where seamless effectively go wanting in solution with bundle basically with self-checkout you can environment, go or pick support and in We're & it up curbside store you very can large online a to local into Go Scan interact Scan do Go some to a familiar using without it having through say probably other do

promise. with about inventory of Amazon the service or regional level clients, excited just to is really meet and leverage facility So, up it opportunity our centralized sort store help that wherever facility

Ryan MacDonald

again. Thanks Excellent.

Mike Willoughby

Ryan. Thanks,


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

Mike Willoughby

and and I'd various Thank now when Calandra. our November third to to And investors I you, Thank quarter available that speak you report between at always in very like conferences everyone and said you as with speaking if call as us. attended to able occur we're this are this thank we much. our certainly forward we to morning. results analysts the we then. that like phone, with before, And would by look


and this Ladies gentlemen, call. conference does conclude today's

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