Randolph Altschuler: The algorithms intended to shorten the time that we can launch new out-quarter processes. And as we mentioned in the script, we expect in the third quarter to start testing multiple new processes in the third quarter, first here in the United States with U.S. customers and in Europe. That’s the focus of the partnership.
James Miln: Yes, there’s nothing from the Google partnership that’s in flux the algorithms here in the first quarter.
Operator: The next question comes from the line of Matt Swanson of RBC.
Matthew Swanson: Great. Jim, I know it’s still early days for Teamspace, but maybe thinking more so on like the customer feedback side, could you just discuss the ability of the solution to help you maybe become more pervasive or deeper into your customers and then also kind of enhance that value proposition as a platform versus the tool? And then at scale, is there any thoughts on how this might be able to help with revenue visibility?
Randolph Altschuler: Yes. This is Randy. I’ll take particularly the first part of it. So we are very pleased with the acceptance adoption that we’re seeing at Teamspace. We have over 2,300 teams right now, which is a really nice increase since we last reported. We’ve also been making enhancements — so it can be not just to really enhance the platform and go deeper into our enterprise customers, in particular, as we talked about during the call, that includes tooling processes in enhancements we’re making with our injection molding offering and tool libraries and being able to share that and run it all through Teamspace, who as you can imagine, those are often group projects. And we also did talk about a large customer that we’ve been doing injection molding with a started prototype with us and now with production, and that’s being done in part because of their adoption of the Teamspace software.
Our sales team is continuing to show that to customers, and we expect to get continued deeper penetration with our customers, refill enterprise customers using Teamspace.
Matthew Swanson : Yes, that makes a ton of sense. And then maybe just as a follow-up on the guidance side of thinking about just kind of the macro implications. And then from macro indicators, PMI has improved a bit. Can you just give us a reminder on how you think about that in relation to your business, whether or not that’s a good leading indicator?
James Miln : Yes. Thanks, Matt. So as we talked about, we’re really pleased with our Q1 performance. We’ve take a lot of the trends that we’re seeing across our buyers, the conversion margin suppliers. We look at those — we look at the guidance ahead, but we do take into account the uncertainty in the macro environment. There are various indicators out there. I think — so we look at the aggregate of those as well as what we’re seeing internally. There is some choppiness out there, and so we’re taking that into account.
Operator: Our next question comes from the line of Eric Sheridan of Goldman Sachs…
Eric Sheridan : Maybe a 2-parter on international, and thanks for all the detail in the prepared remarks. When you look out at the contribution potential for international on a multiyear view, maybe can you break it into pieces of how much of it is down to sort of execution on what’s already been put in place versus elements where we — the company still needs to do incremental investments broadly in the international opportunity? Just trying to understand the mix of growth and margin and how you think that sets up for contribution in the years ahead.
Randolph Altschuler : Yes, Eric, it’s Randy. I’ll jump in here, and James can jump in afterwards. So as I think we talked about, particularly this year, we’re really focused on going deeper in our existing geographies. So we set up the infrastructure there. We’ve got our site in 15 different languages. We’ve localized it. We’ve got sales teams that are there and sort of built the infrastructure. So these are giant markets. While we’re very proud of the growth that we’ve seen in international, we know that even within the existing markets, it can be a lot larger. So I think you should expect to see us to gain some real leverage of those investments we’ve made in the existing markets… [Technical Difficulty]
Operator: I’m assuming you lost him, but we’ll be moving on. Our next question comes from the line of Greg Palm of Craig-Hallum.
Greg Palm : I wanted to dig in a little bit more on the investment side of things. And I guess my question is more or less why now? If I think back to maybe the last year, I feel like it was more characterized around sort of operational discipline in sort of targeting that sort of EBITDA profitability. And it sounds like you’re changing that a little bit in ramping up investments now, which pushes out EBITDA profitability. By my math, I think, to next year based on the implied guide for the second half. Maybe you can confirm that. But just a little bit more sort of color on exactly what you’re doing, the timing around it. And then, I guess, more importantly, at sort of what point will we see some of those benefits?
Randolph Altschuler: Sure. So this is Randy. Look, when we brought in James as our new CFO, I asked him to work with me and the rest of our team to refine and then really validate the healthiest path to profitability into our long-term operating margin. And this included having expense operating expenses a little higher than expected. So as a result, we feel that — and just to answer your question, a $600 million run rate, so about $150 million per quarter is the appropriate level for breakeven. Underlying marketplace metrics are healthy across buyers, pricing, margin suppliers by an uncertain macro. And we’re going to continue to execute on a strong road map of growth initiatives.
James Miln: Yes, Greg, this is James. So just building on Randy saying that. So I think as our first quarter results clearly show with our market-leading position and the size of the opportunity, we can drive strong revenue and gross profit growth and improved leverage. So with Marketplace growth up 24%; Marketplace gross profit dollar growth — gross profit dollar growth at 37%. And as Randy said, we’ve been working on the healthiest part to profitability so that we can continue to invest responsibly in our long-term growth initiatives. At the same time, Q1 OpEx did come in a little more than expected behind the investments that we’re making as well as some inflationary impacts on overall expenses that we’ve seen across areas like employee benefit, software costs and others.
So as we refine and validate that path forward, we believe that we can reach adjusted EBITDA breakeven as we surpassed this approximately $600 million annual revenue run rate. $424 million, we do expect to see continued leverage. As you can see, we’ve given you guidance overall on the annual revenue. I think we’ll update you as we go in the future quarters.
