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
Kara Anderson B. Riley Securities
George Sutton Craig-Hallum
Mark Argento Lake Street Capital Markets
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 Third Quarter ended September 30, 2020.

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

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

Sean Mansouri

Rain. you, Thank

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

Now over CEO, Mike? I'll call Willoughby. the turn Mike to

Mike Willoughby

everyone. morning good and Sean, you, Thank

transparent we about to the transparent, are QX. about in are of times, up-to-date color possible I'll we my continue remind pfscommerce.com respond we challenges pfsweb.com our crisis. uncertain doing response our our weeks experiencing. important the are response additional opportunities Before SEC about and you be to providing to effort we I'd we point both six to into since comments, state highlight the information guidance, being we commentary websites. to out in almost business, beginning ongoing information as an business, business this on do maintain and as that pandemic and current face significant the including during our on as the We're best will the our in And we that to

follow Just links. COVID-XX the

As SFE both business holiday experience Retail growth, business, our segments or on during importantly, their operating the a adjusted sales a quarter. productivity Most of global from consensus holiday contact preparing year-over-year supports remotely through volumes. centers and professional safely among to clients high lines outlook for online whether PFS in workforce record growth of services vary at double-digit strong of excellent we in holiday experts for expectation. high our robust season, our we have Ramping working front retail teams an a remained an activity our the estimates be have continues and e-commerce online LiveArea the ahead new quarter. widely drove our with last distribution improved they're teams. our in anticipate and tailwinds we season. for pipeline levels environment development current or support but center driving compared demand evolving revenue fulfillment clients is digital corporate the on of to our EBITDA will still our PFS focused pipeline our LiveArea, sales and done Across opportunities much business and sales job levels record what In

potential Salesforce XX% Salesforce Other omni-channel at holiday holiday range Forrester at growth come place believes to in for season e-commerce of XXXX through XX%. to sales possible. the that continued channels Deloitte, online additional to For and sales the predictions the digital from transacted in retail generated towards double this rate retailing. will and trend COVID good example, growth year-over-year for the is the this ranges restrictions be CBRE experts year's European up predicts continue of reason higher holiday. record total With and end from in U.S. believe U.S., that these surge in will is cases in in XX% markets to there sales several

also more the start experts Amazon to big-box influenced deliver approaches. pleased, the In that we believe be Considering both encouraged expansion for to year. marketing call are I the exceeded Christmas. clients for the the details sales early holiday. to I capacity the improvements and overall in and And ramping one and our centers global new In team record These fulfillment key LiveArea, by during ourselves client Zach holiday fulfillment well has will are pipeline nine this past transportation these increase two is the holiday provide will progress are and ahead announced We Thanksgiving in season PFS, we believe clients in expansions factors, centers carrier peak area during be the Belgium. It to are and our quarter, especially largely by quarter record additional third holidays. between we one retail implemented likely environment. our a to footprint the retailers. have Thomann of the important, shopping following all the flattening and very trend the from in as And fulfillment and the capacities on current centers our expand our facilities and we since PFS Dallas curve. am prepared volume later benefiting the built on is positioning the over also operations accommodate a DC season PFS strategy two

with closely will and respond the made and to be season. has to maintain pandemic-related and both We the developments this upcoming holiday brands, in solutions progress Jim growth return clients discuss LiveArea to e-commerce their its innovative industry on Butler have while of creating initiatives changes strength additional strong momentum. to to preserve to worked our

in our They efficiency. and our have and once recalibrated strong workflow to the hard recognize volumes global of am everything our dedication I of like processes what growth As we will flexibility safety would holidays. as the management peak centers. seasonal incredible our our order I high again we work for enter optimal fulfillment and proud demonstrated they've accommodated point enabled The employees be and another business, of to have maintain this entire to position heading the has from sanitation overall team into to frontline

more for Now turn to and outlook Tom? the to rest like I'd results XXXX. call provide Tom to over QX our on of financial our the details

Tom Madden

and XXXX. Unless all quarter my I Mike, everyone. morning, of financial comparisons the you, in otherwise the third Thank are to make noted, that good comments

the $XX.X ongoing high $X.X volumes equivalent, revenue primarily million fulfillment in the was by to through as million. segment, consolidated percentage our increase driven quarter. in the generated in the QX, to SFE, we ranges activity in fulfillment the labor new of with or higher $XX.X well continued that to to driven increase XX% LiveArea. service from XX.X%, For last a primarily of stock-based gross guidance quarter. Service the fee third and from $XX.X The third clients quarter fulfillment fee quarter reflecting XX.X%, LiveArea. year, million. decrease and services were primarily our PFS of growth due revenues existing fourth to hold XX% compared currently for mix, XXXX, gross PFS segments costs be Note higher increased XXXX both for by XX% of in XX% increased expense was to expect margin margins with for PFS during costs our to those to million SG&A And of range and as compared XX% within of compensation revenue

of $X.X quarter, had reduced as the margin the we including to to compared million EBITDA third partially and severance-related of Additionally, the ago in a compensation gross increased PFS offset sustained increases facility-related including revenue million, to These XX% amount, in level personnel-related the labor well improvement enhanced new the two distribution quarter strength centers segment by the costs. and some Adjusted pandemic. in costs, fulfillment as the sanitation costs. pressure as result prior $X.X expense; procedures including in higher travel due offset higher costs; growth, the partially with impact primarily year by SFE in a related variable were costs, to year of

level point, in we as our of we the year-end, remain as expect it support to the liquidity we modestly, come then $XX.X and demand, we and this XXXX. the down This the June totaled in quarter debt, increased position, increase pandemic. position position confident the to currently was December million. with navigate resulted of XXXX, look improved to net leases, September total $XX.X Turning excluding approximately from equivalents XX, At debt operating net cash balance debt slightly XX, a back seasonal sheet. to We At And million. debt ahead was net million. as the $XX.X first cash our XXXX, expect $XX.X which million, of overall

XXXX in a to the primarily were resulting of $X.X approximately year-to-date of $X.X the in expenditures million. capital level Our third million, facilities new quarter DC related

continue to new we to spend our ramp between to expect million facilities client activity, As growth to $XX expand and and capital client expenditure current new total support million. our be our XXXX facilities we $X

expectations our amid These, due interest revenue, tax including reiterating G&A product expectations uncertainty expense also are We expense, for and change, calls outlined all to of other to are expense. subject on course, XXXX previous COVID-XX. year, this the

elevated growth, segments our Mike's especially we both for the continue positioned to on holiday earlier are PFS LiveArea. season, believe echo comments, record our fulfillment volumes XXXX and pipeline in business Moving outlook. To continued that upcoming given to well in

is range growth adjusted are with to management year, factors business, consolidated to which X% expectations issued for target our expense raising continue revenue prudent mid-teens of up focus an throughout mind, in to also to to on these With SFE improvement XXXX. we in our XX%. sustained margin from previously the EBITDA Coupled our in compared our prior compared the we be

EBITDA client the our reach to fourth in uniquely In will with last market a our sales line PFS are financial reports, and what operating to of quarter our rates. and foundation, to be margin in estimated quarter, the with have basis e-commerce as projecting approximately remains how growth these upcoming investments outperform across predict year-to-date compared growth peak in prior have the to for other mid-teens SFE this from year, adjusted which are sustain in similar strong growth we X% fourth LiveArea to long it a far we we we a While upcoming expectations and year revenue XXXX the this The term. order as year the range play experienced season's the so orders year's over rest currently are an predicting work challenging made position on growth us holiday calendar we well range. up business out, as to to year is objectives,

of uncertainty the turn we PFS. look continued impact to pandemic, the projected we XXXX, decided expect e-commerce ahead next remarks. our of Zach the over for to past the tailwinds, ongoing from have providing my overall prepared until This As call postpone benefit to targeted to year. due I'll operational we highlights through guidance walk in while XXXX Zach? to concludes the

Zach Thomann

Thanks, Tom.

base, fulfillment client have QX volumes high previous We across to to with experience peak levels are PFS XXXX global activity akin XXXX. the fulfillment continued and QX quarters our of that of in

retail past reasonably clients' elevated the for based we As continue that the see past during behind experience rapidly almost updated built client weeks fulfillment two direct-to-consumer quarter we fulfillment activity expect With our for we the over the Mike the season. us, quarters, expert guidance mentioned incremental holiday expectation six out on significantly look our with and and forecasts needs. of QX, capacity activity QX holiday increasing earlier, the throughout to benefit to of

and optimized We and two fulfillment additional fulfillment both have as have secured our scale to continued operations, centers. launched and capacity to existing increase centers agility of we demonstrate

orders American third and six Our clients our to area provide and services existing allows test it short from clients creates headquarters, than new access during total International opened This new innovation footprint to and center solutions PFSweb's for new location facility to one Dallas us a fulfill additional IT to facility, teams strategically for and environment. in products facilities. Airport located global a fulfillment the future. more North The and drive other is opportunities near easy center the to is several quarter, expanding DFW from also allowing the distribution facility technologies, our

our the located Germany, allows for that additional inbound serve Having in center second existing a augmenting near Memphis have continuity, quickly through investments on them opening optimal ensure part delivery Kendra XXXX. operations in Liège, We an This for went costs the client the full-scale to which for increases containers. we capacity into over we Albert, Netherlands and business location scaling both live result in client has in Scott. distribution up for facility operations, has operations volume. third end faster Kendra we for a were our while to wage first of the with strategically for ramped ready this the fulfillment facility in Liège operation, announced this the prior of did These are relationships, live in ramping Canal to valuable in that four higher we including helped is ship in key product peak And center facility, direct-to-consumer Belgium including will be QX coupled surge infrastructure QX, flow and Scott, At outbound in October. operating the as investments, demand. and additional This launched personnel take more quarter. now node to already

days launch to centers strategy. fulfillment cost-effective period, two respond us the infrastructure. capital commencement to large, of agile new allowed XX our without a leads needs strong and expenditures maintaining ability our This to our expansion through shifting to underutilized within efficiently is and manage to a client XX However, has testament dynamically,

work business. face as signed engagements new a ago initially estimated their uncertainties new their million any COVID-related and to with of ACV in prospects engagements to As stabilize half eight compared the year, to operations, Many bookings of and operations four warehouse value clients in or make the PFS, ACV, during year new the our $X.X contract in changes first estimated reluctant an of annual for QX with million $X.X were quarter. they we their combined to in

these solidify the growth of improve to before additional to begun in secure some into we headwinds holiday persisted plans QX, wins, companies as distribution have Although look XXXX. new capabilities, and their

growth year SMBs market have we on addressable As more, to high-growth expand earlier we involved began client's our on get stated cycle. prior targeting calls, to the a

smaller, a allowed brands date bookings been ACV programs recognize lower grow these our long This to seven result, from period to time. high-potential of As engagements. an with mix comprised of QX, strategy of a to new has revenue in higher number us opportunity for

focus client in have an to opportunities, also PFS from pipeline enabled initially addition we and higher-value our the high-potential but smaller, value large prospects. direct-to-consumer the year. in of team programs deals back on larger the sales branded half increase In our increased These engagements the drove potential to sales of

generate we This With running in second how year, the on years solution the benefit transition existing from of we pop-up into spoken e-commerce, based comment of fulfillment CloudPick-based in a higher longer-term clients and on we have this recently, this our distribution bookings our are in previous This from a pop-up orders. did have already several these the an half have the and tailwinds we live staff and a holiday. seeing total from they implemented implemented ACV for about solution half pop-up some capabilities To in seamlessly the customer in to results, expect these first we for client, year. during growth benefited unique center the of XXXX, than holiday initiatives technology, periods. within on client existing fulfilling fulfillment-enablement facility Utilizing we are their Germany. could projects,

to the year's holidays. closer this help of recent jewelry fulfillment by We order to we from hard quality President across example team with in interesting team's to holiday is center an a Area clients for as better operation get team's Vice that Needing talented brand our quickly engaged has with launch, elevated a worked have of agility shifting recently fulfillment our from Another as the brand entire Brewster, a order to the home with to very win resulted help solutions. country, capabilities like contact of recognize on-premise were center implement work the great flexible distribution major while our address they our additional This client and Dawn meet work new their we rapid this business a a season. within been for has flexibility to safety grown in one I Center Employee an long-term work retention capacity scores able fulfillment fulfill using XXXX. Contact This reiterate work need risen grateful have to To they I'd Operations beginning their earlier with the to PFSweb's our than volumes, in engagement to start year, the solution systems, only the model our and this of we we influx rather members and Mike's Further, preserved local on their of pandemic. outcomes. deeply at sourcing Memphis provides recruit centers of exclusively temporary from personnel, candidates. demands new orders. am IT comments,

featured that center extreme crisis. has Our experience contact a give in These of been extremely forward. we an going contact -- more industry-focused sustain model as example agility magazines, during results, several the hybrid efficient center, confidence us can

As contact fourth through year to the of many October, pass in our operational XXXX. with term. a and adaptability an PFS, will has Jim, reduction longer carry further center, us I'll LiveArea's we see have margins end efficiency pandemic for our us our operations. the obstacles completed to Dallas call which space a collective benefit in through enabled and and enable Jim? filled already the of over overview promotes Throughout to quarter into to of momentum the related should

Jim Butler

we build opportunities, Zach improvements record within the enter throughout Great. everyone. sales and fourth of After morning past the and teams the operational planning quarter pipeline marketing begin significant have we to for year, upon as Thanks, our good and implementing XXXX. our continued

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

for engagements $X.X contract value in year XX annual with XX a to the ACV. ago then This $X.X engagements in estimated million or combined a LiveArea booked also million ACV estimated with compares We in combined quarter.

As we future types of old streams. are have the in indicators hopeful of revenue stated past, bookings leading

cases, client been key logjam in And extraordinary able has under is bookings contracts we cases, many these in clients executives to due awarded work engagements to boost large in experienced we scrutiny procurement down, the challenge QX to signings enhanced In QX big put getting collect result agreement, us within payment While bookings of project getting large we signature the many XXXX. new the We've processes. our provide good this end new we contracts a our we business signed, into organizations of many process. already-strong several we been to and to services, allows on time. work client's through on begin The have which were news multiple in contract a letter should the the revenue delays engagements. and backlog sales head their recognize The contribute now off was at as have experienced through have substantial signed senior during the quarter these situations. that of while our

the far $X six have In fact signed in weeks first total so nearly bookings. of QX, already in million we

but record demand sales the continues pipeline opportunities. qualified e-commerce that our pandemic of another holidays, I'm excited and consumer ahead amid not for As the generated has leadership of grow surprised to

major U.S. the are pipeline of EMEA excited business see to with in with projects strong brands We along multi-cloud very large in our momentum our

to service launches developments several our However, the will to and their footprint enhance to One work as into global for we is our optimistic the offerings. delays additional suite official and XXXX. third Subsequent clients clear; momentum our experience XXXX still operations are about may of manage the remainder project LiveArea's continue pandemic. and announced engagement amidst thing our that we we in grow quarter, of

Europe's Austria covering expansion our is and first Benelux and DAC collectively Germany, Switzerland. the Netherlands, Belgium, The regions into Luxembourg,

new presence in director, experience XX there regional led has business by will over technology. of sales Our who newly information be years our Bakker generating appointed Walther

technology With clients to partnerships and existing served relationships key Pandora. grow have European upon expansion and these formal already this several to client build We plan La regions our including presence. within we Prairie our

announced expansion, we the launched our partnership with German leading brand, officially Just Zumnorde. we weeks after footwear

modernizing will our be the its XX% the platform launching we in and revenue presence award-winning expect will growth, growth with excited BigCommerce QX. e-commerce total We which that by of BigCommerce drove brand's growing global building rival about platform, our store year-over-year their We're who new on partnership in-store a experience. announced digital

their their are headless innovative We offering as commerce demand for support demand seeing especially EMEA brands commerce increased more in experiences initiatives. to

with evolving service-based overall industry VTEX, increased to platforms BigCommerce, commerce addition are for the leader to shift platform will commerce allow represent customer the foundations towards experiences, future remain emerging we These rapid agility. UniteU deployment work to we in ensure ecosystem. In commercetools including the platforms micro that and beginning and a growing richer in other

innovative In in will innovation, and their award-winning our experience value platform introduced us deliver keep require additions Where years. has solutions the solutions we're strategic landscape. design. experience delivering an environment CloudCraze. Senior connected having President to as has us assembled businesses. need of our leadership Vice clients appointed and to and experience services, in already in insights of business beyond long marketing globally commerce multi-cloud in has has and on We unique and expanded commerce expertise leaders and are are and in help EMEA the with region. further as design, support a with a quality for changing record clients and design service footprint and as to experience and forward they transform implementation deep customer for and expertise His Barry there's omnichannel XX like in look we BXB has Practice the our we to to Salesforce increasingly prospects with combining the our innovation our in for LiveArea excited proposition ability piloting and performance continually opportunity design improve strategy, commerce digital consulting than Innovation. years' growth us as and our offerings. technology, Salesforce specialist technology, enhance Commerce as appointed additional and have design, business more focus BXC Sanjeev is these the Desai pace implementation with are where experience global growth leading to a commerce accelerated future of services technology services. systems skills clients' solutions Growing our as Barry marketing accomplished digital Experience on customer potential our new CRM marketing the brands, the increased and further we the elevate overall considerable product Salesforce enter and will integration, experienced Sanjeev transformation leader Global automation. Salesforce, orchestrated over demand design, environment leaders consulting expertise top information new an Desai Cloud, and technology, Desai power our help to full just we We track brands roster To our X.X of This team we Lead help Cloud, of approach of global Barry opportunities. XXXX. industry clients with digital past ensure evolving expanding is board realize industry Barry success experiences a Walther, and adopting Salesforce XXXX. set product driving latest their approaches to Fiske, with breadth Last, leading of by expand our partnership and projects rapidly to architectural Marketing and look innovation exploring growth providing leaders comprising Salesforce Salesforce service performance LiveArea's

commerce Mike? an professional of accelerated pace, closing to aligning best his to Mike we are services at I'll nature connected remarks. needs the evolve back over continues to committed their offerings. their our With support and elevate commerce that, As turn for it to

Mike Willoughby

I conclude several enhancing consumer value productized offerings end, preferences. To with our services. of across Thank have of the to we are I that worked but both meet that shopping scale call of brief larger Jim. to our you, address update diligently, want clients, the changes in not to of digital our needs business only a wanted segments emphasize our our that on also

software this In locations. larger the could enables become another are to scanning implementing of it online, RetailConnect pop-up with addition existing steps to efficient sale online deployment has we that systems associated and retailers highlighted comprising and RetailConnect holiday. keeps during easily high of store staffing can Zach that opportunity the coming hardware an to seamlessly installation with retail lightweight, order. tracking stores pick technology filling CloudPick, solutions each CloudPick-based is has buy international a pandemic. the that store and client's allows earlier, in this And facilitate integrated physical inventory track been also demand up include in integrate in-store the the the solution in Like retailers' the capability

scan As a we we system. Go and to all in-store pay mentioned mobile capability go, QR this point-of-sale then their Scan without solution or an visiting with scan, shoppers the pair use LiveArea's last quarter, And devices are to allows code looking which and to visit retailer's website.

pandemic. are XX% seeking spurred self-checkout help our this two believe, evolve to normal, their shoppers further options. will new customer these payer touchless We of to experiences that capabilities adapt out the or Given clients by

both broader retail in have industry. and response the been We proactive changes, both industry-wide these to in our e-commerce and innovative,

Looking our in well expect. we these changes as into the XXXX, quarter and continue ability elevating come our as clients fourth customer to the remain confident have ahead navigate to that experiences to they for

to Tom revenue growth, raising As are expansion mid-teens, compared expect year. be continue last within to both we in expectations And for margin business growth our and for the EBITDA adjusted we XXXX. to mentioned, units SFE

XXXX, guidance to until decided year. we our for next targeted postpone have providing mentioned, Tom As

volume consolidated PFS record which at And target revenue quarter, rate we be COVID is Recognizing as one-off we business adjusted annual SFE create experienced have an a which fourth have year. believe, an also revenue currently likely XX%, We of to EBITDA still X% XX%, interesting volumes. our increases, uncertainties, to objectives reiterate, a of XX% well segment one-off what long-term of overall rate SFE LiveArea an will grow, fulfillment for our likely complete segments, provided, next had already as we to COVID grow annual the segment some QX, fulfillment with which the could previously some to at overall comps have margin. that improve to we our yet to

questions are Tom our ourselves I answer always, your to to to updates. As and our communicate video And investors available and phone and engage make by happy chat. we're with exciting happy business

will Craig-Hallum meetings on for speak of Stephens and Conference hope open up Alpha virtual to XXXX during now the And We holding on XXth presenting we NASH be you Conference the XXth. the then. November and with call November Investment some We'll questions. Select


from Thank Riley will you, sir. Securities. Kara B. [Operator Anderson from Instructions] And our come first question

Your line is open.

Kara Anderson

Hi Hi. Good Jim. morning.

Jim Butler

Good morning, Kara.

Kara Anderson

to I margin. the ask, little PFS out margin And a part of there's guess new that some in around that? any that you if that questions the would that can provide quarter, one. with on whether pressure starting bucket if color could facilities, be gross from wanted more you just on the that? in bit And great gross I

Mike Willoughby

yeah, of kind it. of sort I'll technical and answer things tee the So Tom you let give off to

we little And you're may that one-off. QX, headed to would find that, I we're you to Zach a say, PFS agree? the into margin, facilities. labor kind But the the talking business. Within I the what the quarter, of with think costs going wage There gross costs would opening mitigating Tom, that's sure gross of some doing during primarily with some associated comment in make probably about bit pressures. associated on margin, side were on, we are I but say, inflation are new primarily

Tom Madden

Yes Mike, do. I

– we standpoint So, the there Mike do indicated, a be of from would impacting costs the as margin. labor most gross again, have

the of new costs the while be of ready live, to -- they the during quarter. go getting are facilities, Some

end Some of as an up those would component. SG&A costs initial

let one Zach, of you our of bit So SG&A But year-over-year. a more the on I'll labor discuss side? cost components fluctuation little that's the

Zach Thomann

inside pressure was as did have on pointing the Mike that impact increased wage we fulfillment have gross so out, centers Certainly, we saw an the margins there. the

to an intentional, In very addition operation us we the QX, staff to across inside impact an for sure, building had have we to we It's that QX PFS. capacity on to were a margins. as will available out gross did elevated we what our believe wanted of be respond make that, XX/X for intentionally

more business towards of of have some to you're service compared on have other bit we the have a in gross pressure of a the we offerings the PFS. as that, at to addition to fulfillment concentration also In going margins, little PFS that see, mix

Mike Willoughby

as to mean, labor to team. to to rates in also during credit we through and spent of Kara, time QX, be, Zach we rising to, through programs we important believe And working a look our programs with peak. those What I clients holiday want his of lot of give cover. as support QX. They holiday kinds we a in it's other to go will during probably forward QX, the to increase move various continued as rates, those QX, and -- adjust sort help clients surcharge

margins impact our from less see wage gross to rates. we'll hopefully, So in QX, the

Kara Anderson

XX%? guess you the then, targeted gross or move, helpful. That's LiveArea towards the range for needles very get that end what happen it. Got need on of what margin, And to -- I moves of top and to

Tom Madden


been generally the there, we've last three which appropriate four to the for mid-range think quarters, I right that Over in expectation the business. is an --

XX% been we've at XX% So to the range.

opportunities look higher they're our a to at project resources utilize available where to continue we international opportunities monitor, level in assist. to for So certain

can we've us component towards done, And the good regards -- And to efficient planning. being of work that's activities that efficient in and got tight in the there. sure, clients. controls that just profitability performing terms to that have on to the we're for order project making So building staff continuing drive in our our benefits

Mike Willoughby

the proud exceptionally been I've and level. the that, continued at LiveArea very say high that, a would together collaborate to has I way team work Kara, of

that. of pandemic, together the And really rates utilization they're these very client the working rate support to these all utilization projects. come they've really higher generally margins we're better during efficiently. virtual, Even on And gross time projects. when this Our reflect are our

So they're really job. just doing a good

Kara Anderson

one about it's unfolding I'll then versus just go levels? And churn you and but too it. someone to question Got over on. And thinking like for historical a little on else year next PFS – environment early the this the new how let ask the me maybe side are from with

Mike Willoughby

may might ask to a bit. but little I little And leading indicators year I'll it that Zach next Well, of in kind My their which the exception few our client exited and about some talked early have chime calls. we a is we've certainly perspective where business kind year seen with client this struggled stickier relationships relationships of client a about that in we've have platform, think small ask be to with of already the helpful. is churn maybe prior

to contract in collaboration our this all the Our our to they we dealing confidence volatility also as us the on of this we level motivated expanding both likely year, this the I'll be let would significantly work and the of we believe operation. they think up seen we've to point to And with the benefit into been quality I renewal, could year. that what relationship renewing has future. come some and even regard say over whether I and year seen were a his but when year next expectations certainly renewals client complexity that are with to we'll given strengthened and has But which quite carry has comment we've contracts relationships into we where into think have the believe I head time. about the coming up this the stickiness see at that had with Zach I head for as continue year clients The what relationship next renewed this more easily as in might

Zach Thomann

side up front there. what to key you contracts of said year. on client for Mike. like a reiterate were the just had that Thanks, I'd renewal We few the

I to has clients All were incredibly and clients of a approach those respond lasting stickiness will taken successfully we've the our client year-to-date, on in that of those our by appreciated us been this with clients agile certainly different the relationships been we've year. I think and think that renewed. impact dynamic as given approach volumes And have have to

we I'm the there client around as the industry pretty for point continue substantially the in come sales pipeline prospects indicated to comments and when we'll softening success currently period. that shared XXXX the sticking team at from from through just also stickiness that's of with back QX, we in see PFS perspective. QX. that kind And are with sales proven see evidence to a we'd expecting pipeline that would this was fulfillment the with to that have. that that expect our folks agile then solutions both That's the some conclusion of through are we've our I result – are Certainly an for engagements scalable which So fact we'd that

about their the that in I not we growth of current So from the as have as well from pipeline really clients same good providers. stickiness current feel maybe the agility clients have sales frankly that prospective enjoyed

Mike Willoughby

Jim I Kara, elevate compelling you that service LiveArea make continue are the recent then it I comment. about in hires our about to make LiveArea clients. improvements his And offering the even more do offering to but section that spoke in including And continue like really we would ask didn't on to with intended that our our service want to and we think side for a with think that And relationships to to is to experience help we're investments to be think those they I stickier continue where lead of what position to around them able business really rapidly customers. digital strategic making the client to that deal shopping which to continue their customer on provide I experience will especially will be offerings, too. ourselves need evolving

but that's So we'll expectation. our certainly see

Kara Anderson

you. Thank Great.


Sutton from Craig-Hallum. question Your from comes George next

George Sutton

are and now: to that e-commerce and sort right overarching business. have also that handled getting it in around right we're of deal for In that direct-to-consumer, fact we driving activity. my at a believe need nice to needs helps what to sounds actually ever in of remember this And you're signing deal wouldn't agreement view themes then they're much said – e-commerce cycle, level what the now period, brands the Thank retail of enthusiasm, QX hearing Jim of long I that an see speed you. world that are this don't big things up so normally two correct for because driving Am I helps quicker Zach's platform business; Jim's a hear. Guys, we're lot those I deals? a being been seeing a of given time. in very where I've I like letters sort seeing not

Mike Willoughby

high for a where for George realize QX I underserved quarter is that control of penalized the they think to they in take may think channels did play. primary wholesale QX to decision of be of which good right momentum bookings, see need – or now I I in seeing you what's the or the channel were both brands very are driving making Many things that such to do but some you're brand we're use year that exactly don't obviously stores, We as that a We as is that typically department by of last destiny. they brands a even activity make them marketplaces overreliant spoke their trend Zach. reflective their challenged. on those think direct-to-consumer activity on are switch. see as are

agree side of one to there's That creative have said, diligent looking tape waiting much of get our we is partner and and need the coming itself. signing with letters objectives on versus start help and they scale through and offer working now signed. us is with and ask working is A often demand. changes we and up back on making increased strong side where who demand out where Jim, red Jim a positive range until pent-up experiences believe capabilities so which that that these the the of agreement various that I And destiny with do driving a at for of broadly the letters bookings driving creativity. of expecting is already the totally to would would for also the way of Jim get XXXX. some pent-up sure to particularly that sort those our red enhancements side if where I and clients' them tape he I our clients pandemic agrees getting so into And innovate actually to get take things And in in think you waiting for are there's contracts through and of to to get be head that's engaged But make red to the a care Zach's in but billing these lot platforms that backlog need our to as about how of this I'll creatively I that's I control ASAP. due bit can motivated tape agree are their all think agreement, with they getting mentioned. brands on wanting you get compensate LiveArea that? we that we very e-commerce can a for a omnichannel And quarter statement are also to very indicator take high-touch a business. working and at we of respond think investment where to we're actually that of investment. into business, your we're of mentioned in agree cycle, that cycle, of the little it would platforms that the this our I Jim have be. lot do to engagements we head around we least momentum as customers need at a sales start say elongating XXXX, signing

Jim Butler

signed, I which I engine I has agree more a think that we're of momentum. have wanted is that organization beyond just LiveArea as the different the of fundamentally yes result, letter in were mind talked couldn't And is we that And do then, And that I with let's business anything for, a agreement I do be Mike -- that sales, share market are growth of might But process, that say, $XXX,XXX. highlighted we conditions that sort signature think have you would before, longer market a of a sales agree can keep we with think get didn't that. Mike that. to on you highlight, that say had in fair – a And highlight then that that a the do mentioned. but because of to two we I reasons weeks I a the booking I bit this process piece million number. soon believe Mike -- as I past. project, seen. that couldn't balance there's which be we the be capturing more our that than through think as might the But hits as might able or $X until you a that that as or $XXX,XXX booking thing's about of that might be you we ever

optimistic. lot that, already but it So other QX stuff that pipeline so excited very was optimistic something lighter that outline highlighted the was we've very, in on about as QX seen mind so before, never our of thing we've in little I quite convert and we that a company, a and have, just and QX, And the really in beyond. the too we're a history that keep about And seen we've as is my sales organization timing. as in backlog like that established an

Mike Willoughby

before bit a you feel on George, we're next I your such enthusiasm earlier acknowledge your and while little such want a Just I about through actually to having question, times challenging did advantage company but our ask the taken really again, going apologetic comment about opportunities. and have created by certainly opportunities. of those large, once for how created complications But I'm some has time. challenging us, at our well they encouraged And enthusiasm,

at high a have do So we enthusiasm you're this right time. level of

George Sutton

Do the surcharges curve some the had quarter that things flattening enough the And one that you to given way of trying you are I and well? execute? curve for like you do around. encourage flat that of be you're So execute the to you and the know moving feel Day to Amazon the feel prepared things hope would shippers will Mike is that concern, Prime you've

Mike Willoughby

to their could The may think the now and I don't actually be clients surge for or But for capacity. in earlier the they're lockdown. let I promoting personally well a perform. volumes so likely would response up a flattening, are be. dance are system believe weeks carrier consumers' are of early a going concern Zach? full are or to to clients. two couple deliver. bit little way carrier see right going I constraints I believe through good that our in of next them surcharges we're concern and continues to into countries all we I is And really little a do. started give activity as good this to U.S. much the I Zach and of Thanksgiving. message the a that, our been cases if seeing lot in all carriers, so to the point Christmas, I'll a what that's set before has weeks need to that Zach I deliver to driving be get where various interesting the more the yet would transportation We the push The at parcels say have indicators. super perspective. into European we just color. be going get know we volumes far seeing dancing of that what critical, see these say continue We holiday and early with believe we off increase But first from so to will more some really my most response

Zach Thomann

as Thanks. it to I'd actually a like carriers to that curve. the of about kind talk relates bit just little

if to the the of on created curve, based incentivizing a where escalate environment surcharge to really it's percent that volumes higher traditional some really number peak As pull have their implemented mix the forward a of the an larger they've package aware, best And core that hits surcharges do that, week. are during meaning the QX of on promotions. probably potentially carriers a that carriers the you brands guys have follow of

put result not just that with carriers a my period to we from The really of disincentive we're their or is structure forward that created a brands net work constraints promotional calendar. perspective, been seeing follow curve. doing, a opinion in we've the retail the same Amazon have that attempt Prime capacity big-box to U.S. number what the an about vocal is Day it's of So during leading but potential pretty the and also factors the

to successful Now mentioned, around it how to and to but ensure will certainly flatten that they're see curve. weeks, messaging two critical and as next be they the that the trying effort that Mike put forth over is, that the energy

Europe us. a is bit mentioned, wildcard also little a Mike for of As

the multiple of forward been days that on now consumers because some online. quarter. the to early expect happened, ability seen countries a an we've front, shopping that still lockdown expect It's couple As it's pull go really similar to we'd to as the have begin in impact to demand that the few little in of also days but into a would last that's that have last we'd start that

George Sutton

Guys, thank see luck, you Appreciate much. you again. Good and very it.

Zach Thomann

it. Appreciate George. Thanks

Mike Willoughby

Thanks, George.


Your Argento Mark Lake next comes question Street Capital from from Markets.

Your line is open.

Mark Argento

you morning. continue quarter. other Good And analysts the see Good forever almost cover guys. for guys nice to have Hey, momentum.

out DCs? thinking of of the what needs it's omnichannel West this one But in guys as you're about are kind holistically to Just the more regional of to of one. that -- of about concept, to you maybe your level. It really for store know of one terms point in continuing about you even regionals network kind more time regional you are Coast quick localized facility. some talk talk be kind where just are how sake one market more terms just about the more down to but even of or smaller the local just trying looks end like the embrace going big talking not Can guys distribution at evolves. a DC I build

Mike Willoughby

right. exactly Mark, you're Yes.

a have network trend a dramatic We driven think toward things. the of I couple distribution this multi-tier year seen in by a that's acceleration

product has to clients' of our as the have has really in always more expectation they one expectation the the think long both implementing desire one But us with that's even prefer thing type inventory working that it's the distances, changed been First, network well fulfillment positioning. primarily in this in clients location. And their at more all looking have inventory our service-level are reasons. by driven clients place I moving a than their that costs is that way year, design or associated from as inventory held that our capital for back

clients also for We'll have smaller distribution of know I about a will implications have where towards setup, that But where a think as type inventory super a working do for same to our hub for having each sort as footprint, multi-tier certainly multi-node us. which we We UK you positive it's that think house tend geography And for future. locations to clients in inventory. multiple of have a moving have likely the have around positive to they moved is Europe concentration. a the continue capital and more in smaller a will region. distributed be Western us of you the thing Memphis each and near are then

evaluate study where next in stores point. some Zach would anticipate hosted area and up over areas. fulfillment to U.S. which better backyard launch to whether But and their for then that? the medium gives we'd fulfillment. we're or add that should whether U.S. move a our solutions here be to to West Coast. have did or each a we of should that enablement accomplish with four metro made next locations the was options the of our facility metro us bit clients. the using will clients capability clients to I in major continue regions. then It by to Dallas is us their for in I CloudPick lot and provide we enable little sponsor And we in of And color like for what now expect quick happening having really turn cover in to will that is our We'll for even to strategy cover opportunities five open the that We want centers interesting. to that fulfillment our staff. RetailConnect It opening we Right the of first to opportunity fulfillment right at is support corporate into that term, if sort So sense our step regional do U.S.. us here macro with But metro the year. more a you the doing or model this early continue any metro our continue the coverage for headquarters end see

Zach Thomann

the is to only you covered multi-node pandemic. a I The think might has thing really think other been shifting to add I everything fully. motivators, solution of that one to the I

a continuity different like unfortunate do about I think scenario there brands the of business look disaster a perspective, QX exercises as lot or recovery from it really that's and regions. if spikes what think were Just differently in does helped tabletop they around

this So that for certainly map accelerate road year. helped us the

Mike Willoughby

that I Each Zach opening with by as And some then Zach. agility saw the Thanks to a investment us just Tom one were of one Mark million CapEx in able production two mentioned our they're that. relatively with signed was the you in I the we compare less we evidenced to we of $XX thing as than being with have lease competitors. open add only XX DC the QX. when in that days. them mentioned especially And of competitor would it. associated announced comments, his also to other from to new facilities time low

without a drive also not our some That business. for us have happy I'm in we that ROI agility with you a facility the needed XX and XX of that per is as million to lot that with ROI. lightweight that a expand don't So capacity think move of do without less a because nice provides how in I million strategy. them excess a where foot square can kind $XX and CapEx we into have quickly facility know than clear I XXXXXX say sponsor contracts to can $X and we fairly compelling opportunity that ability on a with to can spending Just it associated client up XX-year can running days.

a really I we approach. the type us and believe, lightweight advantage fact strategic really helps a power us our So our own tech on capacity platform of deploy demand and agility an that it's gives to and

Mark Argento

provided. Great. Thanks word and guys

Mike Willoughby

Thanks Mark.


next MacDonald Needham. from Ryan comes Your question from Instructions] [Operator

line Your open. is

Ryan MacDonald

this start Mike, question Clearly some on everyone. I a off guess I better. expansion last of and sort footprint. optimistic want facility and to with morning the just Good have little aggressive plans piggybacking of understand you

new you're what wondering Just seeing in of between what customers from facilities customers there? existing mix Thanks. in between and terms you've a sort pipeline in got two the filling perspective the of pipeline new

Mike Willoughby

It's a great question Ryan.

right they So space first And flexibility now to the bit and every two even are we current the tell brag to or campus clients. on to building. off that I'm that leases. of use and all that in new in way buildings options the And I'll us team dedicated expand have are within his that. gives and creative incredibly we that contract you a opened Zach negotiate little a situation kinds They going virtually a

single provide. provide to able location We been and to either to closed in expand about into that of a their you But that go has well providing capacities a those on them QX expand solution additional to in to -- of client and has our sort buildings how may time really for place would within what the current committing pipeline the for that's than our designed in clients of have augmented in space one are up be That one move arrangements a are a said, to Zach you QX new new facility. new moving And very forecasts kind capacity record we for you that specifically of living those both into comment clients yet to in. think who of Dallas more why may about don't network? Zach end for needing as multi-node pipeline clients clients think

Zach Thomann

pipeline those to have up such about leases. set those to underutilized infrastructure the we for And we We're Mike. Thanks lot really enter into we really just marry that being structure facilities. of that don't our with intentional facility the how in a have echo of roadmap and either trying the very

with that are prudent the extremely So we deploying. resources

we Dallas that's the as perspective to And at pipeline. space. frankly we'd center inside we capacity how at and apply same that's that a that materializes structures. we the would are approach XX% our look And opportunity the expand global that So look approach at lease example we for trip we already an from optionality as when

of have inside comments flexibility sitting we us or the finding building intentional provide there. that we taking don't activity there That the optimistic said, about strong really exercising excess still as I extremely on opportunities there those a So of and coming options that expansion underutilized or in so incremental wait of that infrastructure we leases. schedule the have where inside be nature that also ahead feel I to a down pipeline we of opportunities highlighted are things campus a for PFS-side the space top-of-funnel that about have so my really very into

Ryan MacDonald

Excellent. Super follow-up for My is guess, helpful. Jim. question, I

of caution starting -- color additional about is just big having better new projects? can Just Obviously, resources around signings. year some started the pipeline you've But what the it some budgetary bit end can projects what is Would maybe see down the some in of slowing of fourth the extent or understand you curious you to there. constraints healthy that a or about Thanks. to a red this provide close to that's color to love little tape quarter. to close amount start

Jim Butler

sort our not different often of, new clients trying say, up on One so being couple there's the been things have not recently. started sort of it's would they're things and that, getting a priorities the a that's these operating the since focus popped on they a of, are that -- I Yes, cause started. pandemic in, something normal it's and right? something And is them of done to going just to have set

So start the My that a larger of seeing it's the It timing of focus projects projects We're is $XXX,XXX thing. initiatives again, some really focus, pandemic. $X is as since a right? this the we've seen been not million the the business. also that's and -- my

we're very that are happen. required and so that chain to and are of value of levels of sort we seeing sort of that seeing big just more multiple initiatives take there's within require that levels some make transformational on we're of organization projects that these more larger as So an much approval, strategic move up multi-cloud these approval

we I to us project would before get so that of us -- to mentioned this started, start place allows get have get allows us recognize turn to contract, this allows confirmation I revenue. So agreement in contract and -- the to as letter verbal into a

So getting that the The before. the the of that bit we're these answer bookings bad news some I news stuff projects sometimes part larger sales helps of bookings longer of a is -- Hopefully take is mentioned because the little question. are underway. good your that the

Mike Willoughby

will agree Jim. very I'd And and companies a that. during off do drive with having review. these a have procedures projects indicative Ryan, even I that times. just larger in just normal complicated add a put got on is cycle of to desk totally more place the But the of and I think executives sales think just also like he's really lot probably a bit on complex little stack that because you've of virtually a I special that senior to got contract got That every contracts COVID where on sign times. more of CFOs

our and contract through get e-commerce an sponsors and sort can through tracked. fast sometimes power it that And

need intent rely and order to to recognize the they letter And internal in way they sometimes to started. -- on get have the this of Either tape. just urgency red it's creativity work through

Ryan MacDonald

Very Thanks, helpful. Mike.


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

Mike Willoughby

fourth that the weeks. when at excited – and back lot year for all before our with for of you interesting we'll it look be in this report call be interesting up. to really I'd Perhaps March. quarter does our a investors to March so very we very thank Obviously, the [ph] participation. we're to expect earlier, results thank we much mentioned today's a like does insight speaking everyone come March. this analysts We'll a will attended conduct see. and forward morning. to your going prepared We to it. even It's and you. you upcoming conference It Thank little have six activity but I and in be full also conferences to wrap But this


call. today's conference Ladies and concludes gentlemen, this

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