Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you clarify how much freight helped the first quarter with lower freight costs? What's implied in the guide relative to last quarter?
A: (Nathan Andrew Winters - CFO) In Q1, freight contributed about a 1-point year-on-year improvement due to the full neutralization of premium supply chain costs and price increases. The relative strength in Q1 was also supported by slightly higher volume and favorable mix, along with service and software profitability, especially in the EVM segment.
Q: Regarding the larger order activity mentioned, is this from a few customers or a broader base? Which end markets and regions are these orders coming from?
A: (William J. Burns - CEO & Director) The improvement in large order activity in Q1, particularly in mobile computing and retail, is encouraging. This demand stabilization and modest improvement are expected to continue, but the growth in H2 is primarily due to lapping prior destocking activity. The recovery is first seen in mobile computing and retail, with hopes for it to extend to T&L and manufacturing.
: What are the assumptions for funnel conversion and project hits in the second half of the year?
A: (Nathan Andrew Winters - CFO) The second half's revenue outlook is grounded in current order velocity and conversion rates experienced over the last two quarters. The guide assumes lower conversion rates on our pipeline compared to historical levels, without assuming any major deployments due to lack of firm commitments from customers.
Q: Can you provide more details on the performance and expectations for the Asia Pacific region, particularly with the challenges in China?
A: (William J. Burns - CEO & Director) The Asia Pacific region, particularly China, continues to experience soft demand, impacting overall performance. While there are positive signs in retail and large orders in Australia and New Zealand, recovery in China is expected to be prolonged. Opportunities in Southeast Asia, India, and Japan are being pursued despite these challenges.
Q: How should we think about the adjusted EBITDA margin guidance for Q2 being lower than Q1?
A: (Nathan Andrew Winters - CFO) The slight decline in adjusted EBITDA margin from Q1 to Q2 is mainly due to the seasonality of the retail software business, which is typically higher in Q1. The rest of the year's structure aligns with initial expectations, with Q1 benefiting from earlier cost actions and better revenue and mix at the start of the year.
Q: Are there any signs of recovery in the SMB market, particularly influenced by the retail sector?
A: (William J. Burns - CEO & Director) The SMB market, falling under mid-tier and run rate business, has not yet seen the uptick observed in larger orders. While there is optimism among partners and distributors, more substantial order activity across various business sizes is needed to confirm a broader market recovery.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
