Sean Mansouri Investor Relations Advisor-Gateway Investor Relations
Mike Willoughby Chief Executive Officer
Tom Madden Chief Financial Officer
Zach Thomann Executive Vice President and President-PFS
Jim Butler Executive Vice President and President-LiveArea
Kara Anderson B. Riley
Mark Argento Lake Street Capital
George Sutton Craig-Hallum
Ryan MacDonald Needham
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.

Good morning, everyone, and thank you for participating in today's conference call to discuss PFSweb’s Financial Results for the Fourth Quarter and Full Year Ended December 31, 2020.

Joining us today are PFSweb's CEO, Mike Willoughby; the company's CFO, Tom Madden; the President of PFS, Zach Thomann; the President 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

you. Thank

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

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

Mike Willoughby

and Thank Sean, good you, morning, everyone.

congratulate working company more, promotion a over past and operational elevating and of both to Before the indicative units. beginning and Thomann successful faced. PFS ever beginning we their for with Butler speak our through our and me in last through turnout I marketplace progress as recognition the us business us clients optimizing to Jim's brands unpredictable most and of a for have their unusual comments, industry continuing dynamic year unexpected continued to toward Jim truly amazing to and This like also the in with conditions prepared trust we opposed our through thank March, brands financial to president proven against partnerships performance. vendor with recent our all the The respective and have clients, for true year, the lead our required their my industry. Even last the would their has with relationships of I to value LiveArea on Zach performance more partner our the typical promotions as is holiday. prepare year the our Zach to in customer planning further a

to exit the challenges made the thank have The all global perseverance to growth, and Finally, our and performance unprecedented and changes the we the this the agility organization we've of the has dealt implemented possible for experienced not massive crisis while the an to opportunities, year our of as brought to past has thrive, with crisis, COVID challenges work the crisis. we importantly, look and our abundance over XXXX. as and PFSweb of just must have most to pandemic with have the team grace past making to drive us I but the survive response hard in they most for the Their year. worst it teams opportunities demonstrated in over year,

to and turning performance. Now year our fourth quarter full

in high holiday record experienced the across e-commerce year, execute and of fueled demand reflect We tailwinds. PFS at in fourth both volumes by results to built robust levels our units operational and strong continue and holiday quarter business LiveArea. momentum we Our the throughout

at environment, customers. proud our throughout PFS quality holiday and excellent the of robust Due operate service have clients XXXX. level still the during Our a evolving usual of of their especially adapted deeply I'm to rapidly season. performance scale to last a our teams record year, e-commerce landscape, preserved our carefully demand and to managing costs for was high able the

Our performance business the model, into strategic to optimize allowing have our agility, us the built we was and due ramp resources. record necessary operational to quickly

centers fulfillment than less three accommodating order successfully during the very season, they two holiday large perform well Our holiday months live. went newest volumes, after

also our strategy deployment rapid in a solution We centers with of client's current one CloudPick a five in retail deployment client. made based another and significant progress connect for a into fulfillment our stores of holiday product European of

exceptional an learned experienced in future. congratulations QX for expanded ability to to well revenue the congratulations strong and despite to the and for operational this and best business testament and pipeline our focusing have thorough in an ability continued our revenue expect update conditions. PFS and and cycle excitement. your to made job strategic fee and and thank you quarter sales this have will progress investments well we We and After commerce having efficient to this recovery continue your to our strong to perform Across demand responded to done. marketing LiveArea, pipeline Jim of giving client's our environment this our our demand brands our to XXXX regarding optimal be adjusted start a XX% in record continue the us EBITDA for made use XXXX. for PFS fulfillment service as service with of provide we healthy of very year, prospective We've entire year give And a from highest sales Jim margins pressure and we to start results. a consolidated We more X% has year safe and for expanding high and their the number to opening they sales connect rates, faced near in dealt framework both and Chris, as investments possible company related to new the we immediate to exciting sales year targeted our on costs year, on Ashim accelerating Berry outlook emphasize have segments, associated us to with amazing resources expect an well Steve, the labor a bookings year. Overall, unprecedented growth, costs leadership booking for offer our in providing on thus, in LiveArea of of a for with level a allowed clients. clients service XXXX Zac XX% you our already to a can EBITDA margins evolving the temporarily our discipline, the us unit. history. capable have of partner bolster had existing overall this flexibility within working enter seen to our make on suite grow related do disruptions bookings they setting of currently pipeline the second amazing importance and higher will as of Jamie more Steve, clients, of XXXX. is important retail very range place, middle who targeted an teams confidence for key our in the against remainder details Thomann an our We needs. the and as as customer with range XX% to a fourth our We our later e-commerce. some with has in as momentum sales company team, of and our and and perform LiveArea Mark, comparisons we but related pandemic with built delivering adjusted fee hard overview strengthened support continued experiences built. recovery Vegas work. and of Zach With operations services the Las In you, incremental the COVID facility and Peter, within with expect record landscape with rebounded resources during the and strong to segment,

Our growth remain that and all past we teams and long-term continual the Most importantly, productive during have e-commerce. of our and business’ year. our safe ensured future retail preparations for strategy the

of in center differentiated we we first strengthened like of the have I'd have priorities, for more turn on as call PPE the strong we over sanitation protect help positioned The our execution, to as Tom, continue look and outlook to XXXX. frontline year. rest and the smoothly We'll share invest to throughout personnel. to rest to to but corporate for strategic remote teams platform in Tom, in results, PFSweb needed contact to the Our have QX our continued of and over well progress has more our center XXXX the details fulfillment and our adaptable the as you. operated financial provide resources to

Tom Madden

And XXXX. our noted, are full good XXXX. to quarter fiscal everyone. comparisons and of are our fourth morning, otherwise Mike, to you, annual Thank year quarterly the the financial comparisons Unless

increase in during fee costs service during a gross as our primarily fulfillment driven revenues revenue For and well towards mid PFS from its consolidated increased segment, QX, million. XX% labor PFS’s higher sanitation or growth our our remained continued revenue to to The fulfillment increased as typical to typical equivalent was costs SFE in robust activity services well to as of our fulfillment of the as by in XX%, guidance XX% range These and $XX.X due existing LiveArea’s our primarily margin XX% in in mix quarter margins the to new the clients related generated LiveArea PFS, quarter. percentage guidance U.S. with revenue the was XXXX gross below shift of XX% rates margin segment. range come the to XX.X%, while compared gross of in Service caused within from quarter. range fourth decrease fee XX.X% a

some from mix in somewhat me on being by more margin gross activity in Let There PFS revenue impact larger fulfillment our of color percentage service margin. resulted category. our PFS growth generated this was the provide as revenue lower little a gross the a negative

frontline that starting toward QX including impacted rate have fourth our of increases our end quarter previously, XXXX, permanent an both XXXX, workers U.S. fulfillment labor the for In the Additionally, the increases ROE approximately million million, $X.X rates as centers. incremental estimate experiencing costs temporary by half in certain in second of we labor began discussed and our of alone. we the we at of $X.X

year. incremental We during costs also incurred PPE an million estimated of related the $X

high this continued for these clients. pressured preserving costs ensuring at health levels during was our our top period, margins of we performing team that our and our the While priority

margins. successful during was costs, in While our fulfillment still related were impact clients offset partially generating negative the on surcharges a from to some fourth we quarter these there certain

compensation, to the variable activity. Additionally, million XXXX. costs segment increased in These our service to were to same gross segment. the the put million strategic non-cash of costs centers. our hires increases of growth reflect quarter technology margin XXXX. related quarter IT compared negatively well $XX.X $XX.X XXXX fourth certain was the such support was in including expanding facility aimed startup personnel The are million costs include and opening compared of the stock XXXX costs, the related EBITDA bow increases compensation related SG&A expanded to million as as at and period LiveArea as reduced in increased fourth of project, in for the PFS same impacted in our by the Adjusted $X.X the period $X.X of new distribution offering the personnel also

and previously Our costs. expectations was other adjusted margin the which personnel as pressure related targeted as below in PFS well discussed came impacted our slightly EBITDA, gross by facility

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

card industry reminder, service debt our of million net to negatively put in we navigate approximately client. offering with we discontinuance related from in liquidity are XXXX. remain pandemic. impacted one changes believe we by environment bow we level credit the a well Overall, into activity of future capitalized our $X position to was amid our And the as As are the our component a comfortable progress XXXX to

million, the which within including Our fulfillment total the operations leases, expenditures brings centers. falls fourth through $X.X capital new ramping of our our XXXX driven primarily previously capital capital This and capital to expenditures expenditures quarter expectations. debt our funded million, XXXX by at in stated $X.X were approximately

fees on fee LiveArea’s we these to outlook, growth Moving segments. expect service In to light to service both XX% of drive XX% achieve for our to XXXX. we business XXXX expect e-commerce strong trends, demand revenue of to continued our XXXX between compared of expansion

sales our resources of XXXX, to XXXX in growth capacity revenue PFS With generate EBITDA generate – the expansion and we support cost improved, delivery expect in consolidated, segment, compared to fee with For additional inclusive in growth to adjusted our in company-wide PFS, X% we in conjunction continued service investments sales focus this XXXX. to compared on expect LiveArea. XX% margin to to and revenue management,

expectation range March the do and is For adjusted our current to a overall of service level, in XXXX fee level quarter, increase as well compared items due incremental continuing in But to XX% our XX% growth XXXX we COVID the to incremental to year reduced add support few certain quarter some EBITDA guidance. for calendar costs regarding costs XXXX. other we wage earlier to EBITDA of expect the revenue first as the A outlined LiveArea. initiatives to

to fee We year with to XX% service gross XX% continue range, relatively line target XXXX. the in in overall full performance margins the for

professional infrastructure and by will the technology of this services fee the services service proportion impacted always, be related PFS higher As related product margin versus activity.

in from $XX generated XXXX $XX in million to continue will expect XXXX. the we to $XX million a product We million that of to revenue level our decline

revenue expected growth. X% operating XXXX, targeted be as in personnel marketing X% increase do expenses to to this to the in facility to and expected support in our Our related range. gross expect on as incremental cash well product sales costs We is and expenses, an primarily margin based

We $X consistent relatively range to million expect million $X our with XXXX. to total expense between D&A

We XXXX the million our is to price. million, expense expect difficult predict to our market ongoing share in $X in a due fluctuations decrease approximately this stock compensation but to to to $X

given remarks. Jim we expect income will subject level and to updates necessary. communicate turn to my COVID-XX, call the relatively to expectations and over Jim? highlights in These through For interest prepared change compared as This these as course expect any to expense. uncertainty expense, I'll we walk concludes the a are maintain moderate amid to stable increase to of a in operational tax XXXX LiveArea.

Jim Butler

company introduction investments everyone. and to new steady have good services, Great. Thanks, in of the marketing benefit continues that our we in our in teams our fueled Tom, XXXX. our mid-year sales QX in from LiveArea from the level and thrilled which I'm sales experienced morning, history. the achieved as rebounded of and recovery pandemic bookings we disruptions highest related second bookings sales

and an $XX projects engagements estimated totaled ACV for combined Our million.

added projects backlog channel. To increased performance operations quarter, $XX.X ago fueled e-commerce XX as for project ensuring the to we down, and placing respond $XX.X have year we a revenue million as our in QX. customer that Brands worth quarter, value estimated logos nine the obvious tailored the acceleration XX combined front combined further back in on projects are estimated primary where office our XXXX. in QX needs to for to that they booked new during break value. then emphasis project efficient and the they During their This are comprehensive, million the of compares

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

projects estimated XXX million million. project compares to in $XX.X a XXX then value. This We projects year-to-date combined our performance. booked and Turning worth $XX.X to estimated

full Our ACV million. year estimated for projects then engagement $XX.X million XX in $XX.X compared to brings total in an XXXX. LiveArea our our compared $XX.X estimated XX estimated the bookings for worth plus to totaled bookings, bookings This XXXX for $XX.X to engagements million then million

difficult very more have company. our through the we am with I into and As in history QX over our pleased the a momentum COVID opportunities largest team’s the LiveArea the performance sales with excited pipeline even I'm XXXX performance as of of with year, carried

topping almost of whether work all our XXXX terms have that record year. be booking commercial QX, previous late we the the growth. finalizing suggests last of double part end an before continued the Regardless signatures such verbally will of early pipeline, contract timing of occur the time are Our an later-stage sales QX certainly set pipeline, that suggests record all of XXXX year year in of another the stage digit and will where been QX awarded the the

connected reoccurring to over We’re revenue initial add our revenue we of launches. in which of in with to product confidence services rapidly elevate marketing services. component even can that and they Group scale, of us offerings, Creative service evolve projects critical of the our service structured service to good larger our Experience Innovation the quarters. many design project recently very and the also award-winning Barry’s Sethi strength is the help provides other Follow-on offerings of at next talent the appointment of were Director visibility seeing and services. orchestrated new our intelligence, three new and and be offering. our contributions service the SVP India. we as continue to projects Global several Studio including along of Creative LiveArea with To and an Head to critical innovation, our incubated backlog, design commerce, on announced Innovation Rashmi stream as the increase growth next addition of services of the repositioning and Attracting performance more in Bangalore, in than In strategy announced top our our Barry as deliver we addition Fiske QX, QX newly Lab in substantial, follow-on new our

team build and centralized a clients, and initiatives facility region. hub act and Further, for the broader As members it footprint will and for for new will India in a these we accelerators across other leverage as establish the this of global Barry’s LiveArea globe. design prototypes APAC

and into BXB projects in stages see eye Hybris such landscape, BigCommerce, to an various the continued opportunities with large known as a platform our and Commercetools, to and very our deepen strengthening pipeline hydration most program strengthen ever partnerships our an brand. recently commerce partner see we’re Salesforce with our Yotpo record LiveArea increase backlog we’ve loyalty several to I’m I’m at With pipeline strategic partnered Nuun an with of last and serous sports impressive encouraged a and sales Yotpo, with multi-cloud leading of and Company, platforms, Salesforce. look and bit to and for partner. an QX, e-commerce as was we evolving headed excited to also most seeing As year strong marketing SAP rebound launch platform customer opportunities a what build implementation. also provider. opportunities SAP-CX our value as a to strategic

into for expanded projects We we also have redesign online multiple announced collaboration store. that experience recently this since Nuun’s

In LiveArea in the many doing for Digital addition AVA honors annual work competition. others, won we’re to Nuun top great and the Awards

including As time part Cloud successful online of Year an it’s their be as success. a its I’m their in the on very they certainly Fifth this I And think to should focused awards, win, I said of digital we team kind best I Salesforce in continue support big won channel. six us of And built for which calls, well holiday. Saks to name for entirely was Fifth also and client encouraged amid win. last earned awards XXXX four past storefront team for is digital on Saks love gold that a for launched with which adaptability my gratifying that work. This Avenue, work exciting of. our two transformation, is recognition the award-winning to new year a position I win of that a total COVID-XX the by pandemic. Avenue, Saks year, thrilled the Luxury on Luxury LiveArea can work Commerce advancements our to embark detailed Retailer

improving advancing future development exciting team highlights further to rest job offer client’s – to PFS. our custom premium The experiences call our review the Zach? very, built, With underway XXXX, to our of look momentum over and forward With our of the to for comprehensive we turn initiatives leveraging look globe. platform support to we forward LiveArea. growth the done record I’ll driving an the excellent and anticipate sales bright to looks and the have has through very momentum. We that, business Zach from capacity digital our around pipeline strong have

Zach Thomann

Jim. Thanks,

great quarter to ship the with success. at outpaced and the holiday with the record closely beginning on agencies investments teams ensure workplace incredible for especially drive had mentioned required transportation and volumes labor required especially Mike during service with our COVID operational period, clients speed, the to great very to areas but experience. our the at We record safety launch QX. teams. enabled time QX As experience our new volumes to management efficiency investments, Executing of our loads levels improved of a deliver client’s deliver our clients, proud centers, the struggled use retailers our this fourth transportation to partners of during and season order our client and and We led to entire Christmas. us and XXXX I’m temp results. delivered and including and elevated had a measures our to COVID and scaled customers fulfillment during when order work providers commitments of quickly for meet two a call, our ramped QX network unanticipated very deliverability our to my expanded for has carrier customer higher and distribution many client’s business temporary seasonal which record perform These at QX rapid revenue in

had pressure weathering until the is stickiness this key exit have an a our pandemic. setting believe up and I our strengthening post-COVID transient investments into position client as world. nicely on bottom the and these future line the margin we us to to market, we in continue to profitability then growth. the relationships impact come fully will competitive have anticipate capture further While We while of move to our improvements

to holiday our on performance. Moving

history. Relative As to million orders. fourth quarter nearly number many published highlights in January, year grew our orders we total last fulfilled QX in saw you we quarter to of the the have order QX our largest of of marked a experienced we XX company’s fulfillment and XX%

million processed orders month During over November customer alone. fulfilling Cyber during million X X December, we over and each orders Week

XXXX one centers, order-to-cash two and new our total financial operations, million over payment In for capacity our $X our processed transactional the at gross our key footprint existing located in an and only than processed levels value fulfillment on facility DC year-over-year through in additional billion had Liège, as full new us fulfill center platform value the output and to us our For brands, newest fulfillment services we fulfillment conveniently European Kendra daily also run accommodate us distribution Dallas activity we area what at season, Mike the Scott. to full during we billion. and season. about earlier these e-commerce in for clients center $X.X including increased made center clients. Belgium contact operating for year, holiday accelerating fulfillment This orders performed expand personnel programs capacity, XX% full $XXX during volumes. allowed we shared Europe, volumes. more order strategic to holiday elevated center our as The to from our investments elaborate fulfillment In To swiftly well high several address allowed expand to the allowing merchandise capacity,

opening model. both and facilities less to scale so Our is agility effectively ability to that and demonstrates get ramped operating to after our three ability these our performing than months core our

compared ago review We bookings ACV contract engagements estimated QX compared quarter. million year the $X.X to new for in bookings been PFS. XXXX. This four of PFS brings in XXXX Now or ACV estimated our in million of total to $X.X annual $XX.X engagements value briefly million worth ACV in worth have to new combined an $XX.X our million to three signed

pace. organically in client unexpected current an expanded engagements scope at grew Our and clearly

to middle experience did the year. due complications to of pressure the the New COVID related bookings throughout

currently the early is nicely New in to obvious opportunities build half a for performance e-commerce anticipated clear rebound our in and clients tailwinds. back began brand demand of saw strong improved to are cycle back well for XXXX. presence setting levels believe the QX PFS sales as XXXX we up much the year, towards as XXXX bookings in with I showing market, from our benefiting the

pay guide related and first shift that for environment the to uncovered season need their an retail order we the carefully our long-term facilitate choose The broadly we I study confident into recently will digital year’s announced XXXX In am from even brands opening Arlington North investments and our with client as last need to brands validated operations demand, growth. growing operating retailers complications, response have approach has the As glimpse urgent omni-channel and dividends fulfillment for and Vegas, brick-and-mortar the their trends newest clients capabilities. for a offered our to recognized holiday our Research, fulfillment to industry gradually retailers additional pandemic in recent will partners recovers challenges, peak Las performance center of in despite that current the the Nevada. our continue our to

skincare to allowing Our of a we new capacity in with with the located this large American to airport, Las facility seven year. to North West opening, set North is us go clients have strategically will QX Coast newest will fulfillment new and improve center large Vegas expand facilities footprint that our customer contract be basins. company servicing In this near our a conjunction with signed live for

new American not operational our this Memphis facility, for Expanding newest services and our only client with will facility centers. Toronto client three utilization facilities fulfillment our getting year. North services momentum management our Our from demonstrates PFS this of has skincare fulfillment that ramp, over this already area but from our into also carried North of our XXXX make transportation Las Vegas and and use

season. our environment. I'm ability deep work throughout to our holiday a XXXX, of dynamic allowed clients proud their and extremely Our to and for for performance us maintain of service distribution the dedication to grateful our high optimize has scale our and in teams during tireless infrastructure for our quality very current I'm clients existing and center contact

its PFS. closing call for And the we to business agile pass greatly Our opportunities model the for Mike? over remarks. more has now I'll year. forward ahead proven Mike resilience past look than to the back

Mike Willoughby

up Thank I in comments, compared $XX.X Zach. before you $XX.X my plus LiveArea engagements for want to just in was the wrapping to case And it, million clarify you, miss projects million XXXX XXXX. bookings total

for results prepared very our up operational wrapping I'm financial XXXX. proud comments, Now the of

the our two from cost $X PFS centers. close foundation the the costs are ability sustain costs in of sustain retail all to in than demonstrates for we in year our rapid most we XXXX wage much and COVID to costs new very Our wage and to associated performing estimate part wage to wage managing chapter for of with of COVID safety-related lives, rate inflation across incremental XXXX, our navigate the the still our adeptly more expected We half continues ready business these carefully the clients launch all strongly $X we inflation environment, world this have while built back compared strong complicated PFS changing of million volatility rates. a million business and of costs and are safety from business. and And and our pre-COVID to fulfillment related our

to are our we wages. adjust we year post-COVID exit conditions reduce or the and pandemic for and working As operate, planned this we pricing COVID costs eliminate to reflect safety workplace these in increased geographies reality to

scale, would of of in term. the creating we the near flow to benefits like the we So the are see line certainly more bottom to

that our for result top currently line We business in a in are competent that believe XXXX to as seeing significant our XXXX to results profitability future the our we and exciting is our tailwinds benefits look expectations post-COVID we will business. across are evident very our I

available exciting questions call for Michelle, including to answer and the up share by and happy open we'll are engage and ourselves always I to with for making and our phone updates now. our questions Tom business As right questions, investors answers. available


And Instructions] Riley. first Thank question with Kara Anderson you, comes sir. [Operator Please B. proceed. from our

Kara Anderson

throughout when to think just you're surprise LiveArea then, driver performance targeted will you that to Good on biggest XXXX. out ask XQ at is terms I that what bringing gross expectations the you the elaborate within was to mid of like, piece timeline the is EBITDA adjusted then want morning. events? Great there? the back making PFS put for or on job its margin all internal range, the mid-December And changes to margin EBITDA last it the year in on, XQ, clients your of margin? did happen the And on

Mike Willoughby

first the take I'll Okay. Kara. two,

expect think, than volumes late time very we top see that across we to traditional wage remember we estimating partners. in some in associated We labor, in volumes temporary of to carried did seeing see the did an The we that received and seasonal also might and wage both increase also ramp would that. earlier more see did we QX. volatility than a that various order we QX than see as I elevated of on Thanksgiving fulfillment normal and the for even hoping volatility a rates distribution We that with early, period. looking rely a particularly markup which where those that holiday. normal labor would to weak, then rates, more higher of were in we experience, typically ramp us flatter may that August see two And from peak really inflation indicating that and sort higher. that were, the of start, before we So in did and November, and were of volumes certainly caused quantity you QX. as we Monday we while And that wages did was smoothly continue to saw were with a in than we October into heading would our a into we Cyber on had which And with overall distribution difficulty QX, broad again seasonal were temporary headed weeks through see but a ramp that starting

range And were than in had a know but a don't came I three-week we that both the by and margin higher not November. below answer the second so back just communicated estimated, bit labor they to by just effect pressure did as EBITDA that that the the questions, enough to we I is lot, two, the one. missed little that adjusted in of cost actual Kara, had period,

Kara Anderson

rates? part think of of you The just kind other your back targeted can timeline it in the was when for get you

Mike Willoughby

in PPE. big our screening reduce authorities that's operate from right? policies the medical around for alter we the a for to the question we're we and governmental processes geographies that one can start social and that Well, things potentially on is distancing, So experts of year, change when Yes. the clearly signal looking

CDC place had schools in happens far, for now the regarding has we've continue has of so the what changed And months. nine in set been that guidance procedures expectation almost to recently. some But

at be quoted that the and my start that couple as wrap-up is you here we're even those we'll I same. easing hopeful next around to and workplace with biggest comments to costs. that months. start obviously, see able remains And in so an indicated procedures in safety, The labor of modifying the statistics Tom that us to to the start we'll looked to be should costs help reduce variable it maybe But our associated

We the have half of year. expectations currently back the in

to more seasonal mix to FTEs from and compared that bringing employees agencies. adjust temporary will workforce in We in our our we're permanent as have

mix which stabilization. also of that the I to PFS with has wage looking what help probably margins for the in stabilization And believe change be should we're EBITDA post-COVID So those rates, adjusted business.

and the one we'll does Memphis back actually according So in what how wages supply especially Two half monitoring in QX. in be our to of affect, the how markets, in early and things, we see. it rate demand we'll market core demand, levels, situation saw pre-COVID – at stabilize to lower than is, year, stabilize a are rate what but and a and at stabilize than possible of QX just in will higher they'll seeing QX probably this have QX it's QX

or that the year. policy then not us this is of what half be of year, we having go that enter as COVID it policy million about In have some monitoring the hope QX the bar Frankly, $X.X holiday a is I stable similar either federal how look the wages permanent and meantime, reflect about back to did meantime, last whether did for offset in if of in what and help still especially will clients to price we to to with we'll and not far market in as position clients complicated put The a policy then but of holiday And costs. or true, other change the conversations clients federal surcharges, situation, we might variable a two surcharge those with set we're changes related federal costs. in. from the ramps will that to a like wage things, a revenues

but obviously some, increased help offsetting costs. completely did not it our So

Kara Anderson

the on LiveArea side? then And helpful. Super

Tom Madden

And business EBITDA Yes. for year, LiveArea LiveArea side, or the the – XXXX relatively so of Kara, with adjusted was for for level. on the stable percentage XXXX, contribution our kind direct the

couple XXXX, components and it of lower than personnel of that related that we and initiatives order to type the in that you costs were big somewhere strategic on some to of kind at some range, as as were was a that QX, related personnel increased in XX%-ish of – look of we the So compensation in have terms of as making of that growth for the the well drive some stuff. variable investment

So, we the period normally because during comes a in time PTO higher compared place all the know there’s bit the bit a little year. of little to as lower takes quarter that QX some of level quarters just that other during

the EBITDA expansion in of performance at the we look year. in But account a as for relatively as we And for combination came year, LiveArea comments, line came prior we kind our as well, with indicated our do XXXX. adjusted in but expect those prepared into things again. that So some business, LiveArea of the

Jim Butler

add made, struggling doing of that advantage a well. really Yes, market took it’s, Tom, these just were when purposeful to that, we to were we investments were that was

of during And marketplace so talent this some best up picked the period. the we in

purposeful I for were and of investments lab, people investments. other like Barry of highlights, Tom these as hit on that made, on bringing innovation really the showing immediately So, but we before some building about sort talked an those dividends

from smart very, very my move a So perspective.

Kara Anderson

talk for the X% cadence can periods certain the you the year Great. PFS the like you Thank you. And growth to range kind XX% of year? then of of throughout just about maybe XQ lap in as guys one last more,

Tom Madden

clients quarter be the or booked as do coming challenging the a we are implementing you comp Well, implemented second and this Yes. know, clients is time. platform, have either going new at we onto to Kara, that

is that will of start to current our that of of facility. kind back client is One a to Vegas Zach the bit into facility, of more in clients them half mentioned our several anchor in are to probably QX. the with moving along going an that QX during client New a be that contribute facility, Those that

in organic very will this growth PFS as and new we see in geographies we challenging growth growth And them QX. QX move that contributing volumes rebound new and continued and hopefully new to from we’ll seeing into current that that bookings hopefully quarter PFS it’s a to in continued a what’s mentioned, But both we’ll QX. narrow strong as So client QX as our QX. clients but we look comp see in start at clients, looking then and to relationships some the for with likely expand revenues those we with, current help continues QX, like into client gap. QX, for have that expect strong would we’re elevated point of And with

going a making year-over-year, to help going achieve QX and and from QX you’ll a QX up see XX%. us be think it’s growth X% comp think difficult to I to have kind So, perspective that look of is good back-loaded, I QX we’ll then to

Kara Anderson

That’s you. for it Thank Great. me.

Tom Madden

Thanks Kara.


Lake proceed. Argento with from question Mark next Our comes Capital. Street Please

Mark Argento

Hey, guys. good morning,

of had investments a questions particular the segment Just in LiveArea, advantage got many a mentioned got just take I Jim so can couple and marketplace. margin we think of

for got do about in stepped on XXXX opportunity for in last terms as what done XX%, below know, roughly that in it you annualized a good that that haven’t looked should XX% business? I business a margins I think If EBITDA at EBITDA or and it business? math year XXXX, think and the margins high back mid-to-high I this what target somewhere it you how XXXX, out I teens guys say obviously segment you year, an long-term as think but almost shook in do for of basis, back was as on that margin,

Mike Willoughby

maybe we specifically in the marketing our we and sales Tom about under XXXX. and Hey, that bit but let future under reason on this in Mark significantly expectations, investing, declines XXXX, point business, in answer saw investing LiveArea comment that in as revenue XXXX which we back where question even primary were headed the a XXXX. into little We at is XXXX I’ll were I’ll timeframe,

we with and Jim revenue has significantly demonstrate would regard paid some but to that as bring on invest we look dividends as And really top impact sales in it expect fixed LiveArea, with of scale you so would that tier line infrastructure. somewhat you has the we come the growth, it to grow the top top-line in, the talent, short-term, we decisions expected clearly made to at in to bottom

would not quickly your spend as going growth grow marketing top-line revenue to the as indicate. and You’re sales

that be this So, let sort think we the would that levels including to year what normative EBITDA about in business. we of starting expect we’re And talk start from adjusted at see now, normalized kind to would or I’ll levels the margins Tom that expand. of

Tom Madden

Thanks Yes. Mike. Yes.

down just business So XXXX we about for adjusted contribution XXXX, was year the calendar for you percentage, levels is of if of thought from XX.X%. XX.X%, direct library will, EBITDA which the kind was slightly

we the to benefit both make while we continues balancing of to four some that So grow, service go to percentage as do of call alluded anticipate want years, should forward. that teens it the as of I we we high anticipate expect that fee would revenue we moving to scale investments as growth. towards Mike going business forward, ongoing XX% that within we, still to over it that support as there of a the be to, from range, kind next, the as three

an to revenue stream higher we just we from see able of a So, forward. to direct being able contribution it should as go be off in percentage that as we go improvement leverage benefit forward

Mark Argento

sure surge they getting guys stuck you middle. or pivoting of opportunity FedEx, and ops or you the QX UPS terms whoever and terms business it the in And around of the the pricing, getting And the structured in kind peak are like I’m guys the particular punched way these just contracts everybody’s and Got then again are seems are and in price, get of it. helpful. surge for holidays surcharges. It’s guys to you

thoughts on is mission killing how chain ability more are really with your everybody providing to some critical on effectively taking it Given the when be any it. you aggressive to instead guys the else surcharges of able services be

Mike Willoughby

temporary have a around living just higher have we is, to at all Yes, historically going than It of actually that, there are holiday a contracts increasing. clauses so what as price help that came be and to out pricing sure clauses to we need want increase. that of sort been go as near look client experiencing want that those as holiday. real pass The actually seen leverage related to all a indicated indices to a want don’t timing look, some between a haven’t are of down increased some earlier really relationship issue sort costs see ability certainly some us get operates of of was some – is us to when a of to transportation the our were a to some a of permanent as with many handle frankly, holiday on holiday. term a in in we while bit to question of allow really cost the And that carrier, our only discussion clients far And bedding case, help. sort the the have to of want that to The a going go within client great has in somewhat are way it’s exceptional We clients, our have sort And clients more QX. costs with you really expect that And opportunity a there, we may this an we going the our even be. these to situation little we in adjustment costs client those client, start we catching to carrier environment. virtually opportunities say, last just to it’s I chips bit difference stable then program and for And us you into that conversation sort point, cost have of where Mark. this more our save, indexes on some this these exceptional we make instead some of as do a discussion. to rolling of expected, question, is an along indicated the type relationship really as to the the exceptional a did we’re inflation, We costs were to as which have are permanent better costs. to increase but transportation with well, we and very long-term a of We go we’re information. may little this commodity surcharge and

FedEx, to local If you not rates, move to you contract UPS necessarily a your with your volumes delivery don’t then carrier, carrier. can and can you’re locked into or can like around you switch long-term switch a a you

We the we of take most with have care our long-term. need and those these three clients into to revenue contracts that protect five year for streams account operating to And mission to were important those that clients. take is annuity

potentially revenue at going client a quarter a and we about be really difference leveraging annuity longer-term back So matter versus relationship want adjustment, or with stepping out over client about a early stream. that of putting but is sort think I timing possibly and the associated a talking the of to too risk two careful to

Mark Argento

employees, that Got pay even around difficult the and off. their And rates actively that's is their to obviously ability it. especially I holidays. mean, the mean, given pick I'm setting ship that, I assuming scale, back Amazon not wage type for

obviously of for with. lastly, you out? roll terms wage guys use in some in that of then costs terms maybe upon that's is issue something how And So rates laws, just additional wage you here, are contend in you depending need an minimum laws to uptake of – terms the

Mike Willoughby

for Yes, Mark, with is you a I helpful that markets, that's that. field in us conversations to the wage our at you've close paying would anywhere point actually not so above labor with different got everybody, most I facilities; we're minimum that a think a because sets officially change change that quite macro official. macro it’s for a a bar affects that level think bit that that's truly clients, playing have in

has versus a they seasonal the our little to the in It’s it the overall? hopefully into we it this us, really just say, kind how operating us of of some be, actually higher reset sort the QX. back versus clients of offset half cause minimum are we Or part-time, comes said that bar Federal question is level? such to speaking, that effect I would as will but phased look their to course, how other uncertainty labor the it's of we mix the currently it minimum adjust Does most of So is facilities. sure full-time does some a guidance which to do forecast automation market change into up of And generally action see to with to paired forecast to because earlier, And all costs this at we that this big between is, phased our might appropriately does rodeo adjust levels continue at? appreciate the effective up at the new ways bit at Federal as increasing have. as are a And wage go and naturally we were more year levels. hard probably that we last I kind if are creates wages in, was point what if a just QX, the bring already with as clearer to than making balancing Government But and the in, were uncertainty. guidance helpful year, actually than think which from by Government, the the definitely for

Mark Argento

Right. Thanks guys. luck. Good

Mike Willoughby

it. Appreciate Thanks Mark.


Our next question from George comes Sutton proceed. Craig-Hallum. Please with

George Sutton

– follow large you. move had, North Thank that will the on to you Vegas Las want forward. just to when I the and

we about smaller fulfillment these it's industry trend in think the right very regional around now, As centers. the much

to forward give see world? to to months, ability larger that the facilities parts XX the to serve these is you and that XX larger like continue or what of additional we going look we're As

Mike Willoughby

Yes. you're see. George, going I where exactly that's think to

with opening agile what way to we're to Liège Riverside here And a timeline Las on in approach You're you've a we're open we in similar that what more the currently pre-port move which Vegas, and to our that's opening as same. our seen we in going open doing taking exactly although opening around rapid and a nice, are around familiar of most Vegas, not CapEx facility. but the very, of our in operations area. a us see they're Dallas that philosophy productized operate and is Lightweight in highly teams and infrastructure, can the it's relatively very facilities with the they that competitors working facility of pressured very is the toolbox facility would low and that a how compared repeatable to

facility only see think of client during hosted volumes is And smaller any clients, our So their do see in facilities. CloudPick you facility us solution you'll Europe, think in network with we multi-node second will about then of with I fulfillment but e-commerce saw solution European moved QX. the in XX% that network, I evolution, the you into to that their fulfillment our where their in and out not like more co-location CloudPick-based an operated thing

both a at plays We’re multiple node help part the metro higher do and margin for obviously our multi-tiered closer moving And network, position than as which in client further assistance, co-locating core position consumer said, labor, next creating their but update our I of into fulfillment in RetailConnect big consumer. multi-node operational area a minimize fulfillment that, into you're them the client here, as weeks, our only for their also solutions we'll and and a that. areas metro And leveraging services. inventory I'm facility, closer couple have, to inventory or client their hopefully stockroom a those with the to a to our to excited but in in technology where RetailConnect transportation think facilities which I and exciting a a to of is own very hosted the to client costs deploy they're concrete ability deploy CloudPick very is about but in not

George Sutton

now, one pass limit I'll Will that Beautiful. Thanks. question. to my or

Mike Willoughby

Thank you, George.


question Please proceed. MacDonald Next Needham. Ryan comes with from

Ryan MacDonald

much Mike, know way maybe to question, Would rising love holiday seem taking of in to do we and customers, season environment, sort think around about more to sort how forward cost of is as a initiatives offset look Yes, costs? as that good those love with there scale around to some moving RetailConnect, address morning of new CloudPick rising include sanitation. everyone. you fulfillment Would those a the booking given solutions scale. to to offerings, given through of Thanks another continues that and you're Thanks. wages be my for the now percent volumes at and you more these conversations hear your can and

Mike Willoughby

Ryan think for long-term, answer the medium and is the I yes.

the it what or from with RetailConnect phase client we one things be the this of year, pilot into into within also to of order and actually beta depends there on moving it rolling to percent is for able And and But environments us I way adjusted margins for year successful costs especially think the production This to with interesting costs we is a to that in send with to products a us they where for in margins, is are concrete. are, production. our that'll for fulfillment. associated transition use really both RetailConnect stores offset we operating start gross volumes are see product of labor clients to not us see the PFS expansion, initiatives to EBITDA business margin fees those have production in how as out. their to only

fulfillment because to compared their pilot order this that their they productivity for future order in aspiration, volumes, were we're use inside as their the they fulfillment pushing of to previous increase of the with the were RetailConnect stores. more that stores client in using that, their Their a they percent they increase to as look them, able to working – total omni-channels a volumes. XX% is to had were And solution processes. saw first that stores Our mode to using manual according fulfillment

material if that become that's consistent could roll case, we to would exciting, clients, talk the – could out of And see and a start as as more to and we and a right we center so, And like fulfillment a part this that's that associated be call this revenue trend, revenues. for then details separately separate is get category the we RetailConnect you where CloudPick. some out with do possibly of you'll that a hopefully now give call and to start But more bookings details. year our

Ryan MacDonald

as it I'll to Excellent. leave Thanks. one well.

Mike Willoughby

Thanks Ryan.


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

Mike Willoughby

around everyone thank is investors early to And with which analysts to like our corner. I'd we this attended Michelle. look our quarter to report you, results call Thank first May, we and as just speaking morning. the in forward

you this us thank for morning, being So with


and this Ladies does conclude today's teleconference. gentlemen,

You may disconnect Thank participation. your your for lines you a this Everyone at time. have great day.