Tractor Supply Company (TSCO) Earnings Call Transcript & Summary

Sure. I mean like before -- like from a technical support standpoint, previously was a challenge kind of supporting the solution. With SOTI, we can access the devices remotely. We can manage the devices. And so it's given our technical teams a lot more efficiency and being able to support as we're expanding and we're putting more mobile devices and capabilities into the store, just the support of the solution. But I mean, those printers -- you visited the Thompson Station store, you got to see all of this kind of in action, but like when -- if you're doing a propane sale on the Side Lot, as an example, we've got full mPOS functionality, we want to be able to give the customer a receipt if they would like one or an e-receipt.

Yes. I think the cool thing about using our printer management solution is just -- it doesn't just manage a single type of printer manufacturer. We manage 10 different manufacturers actually. So you get a single pane of glass, which means you can pick the printer solution that you like, printer manufacturer, we can help manage all of them. We work with all the different printer manufacturers. And the big thing about upgrading printers is you have to physically go in normally to physically go in and touch every printer. But with SOTI solution, it kind of automatically does this across all your printers instantaneously or you can schedule the updates. Let's talk a little bit about compliance. It's really important. You mentioned buy online, pick up in store, their mobile POS systems, compliance has to be a big issue. Security has to be a big issue. Can you talk a little bit about some of those types of challenges?

Yes, absolutely. So with SOTI, we're able to manage those devices remotely. We can administer security policies on the devices, we can manage kind of what applications are installed on the device as well as making sure just patching, security compliance that all of those devices are updated. And then in the event of a device is lost, we're also able to manage those remotely from a security standpoint.

And they're shared devices as well. So they have this concept of single sign on. They can sign on to any device anywhere, which saves a lot of time. And then the apps that they use on those particular devices are automatically there. So it saves a lot of time and you're compliant. All the data is encrypted. So Glenn, what about troubleshooting? So I know prior to using SOTI, you had devices that were shipped back to a support center?

Yes. So I mean, with SOTI, we're able to remotely access the devices, that's greatly helped kind of troubleshoot. You could see exactly what the store team member is seeing if there was an issue like with a particular application or access. And so that's really sped up our support process and just taking care of store team members and then also just the -- with the printers, we just didn't have the visibility. So now we've got full visibility into kind of the health of the devices and can remotely troubleshoot in most cases. So like -- in most cases, we're able to remotely fix the issue quickly and then eliminate the need to do more costly kind of replacements with Store Depot.

Yes. I think that kind of caters to this last point here, which is around total cost of ownership, 80% of the cost of the device is perceived to be -- or sorry, 80% of the cost is usually perceived to be the device itself. But in fact, 80% of the issues that arise from these mobile devices, things like performing maintenance, support, battery. So all of the troubleshooting that you have to do, a lot of the cost around shipping devices back and forth. So these are the additional costs that a lot of organizations don't see. They might just purchase the device that's a little bit cheaper, but you actually want a rugged device that's going to last in different temperatures, they're outside, they're inside, they get pretty hot, pretty cold. So you got to think about all of these different things when you're choosing the device, but also the entire issues and how do I avoid downtime. All right. So is there anything you want to add around that?

No, just end to end, it's been a transformation like in support of our store team members, our customers, having mobility for the store team members and kind of integrate from a consumer technology, customers are using the mobile app, they're shopping on the web, they're coming into the stores, just integrating the consumer technology with the store team member technology. We want to deliver a legendary experience. And then the AI is really transparent to the customer. We're arming our store team members with Theatro, with Honeywell and all these capabilities with the apps. So being able to quickly deploy generative AI apps like Hey GURA, having that foundation in place, we can move very quickly in support of the team member and the customer.

Wonderful. So one of the things that we do at SOTI, which I really absolutely love is we want to go and see what the customer experience is like. And so this is a picture of not Glenn and I going golfing, these are actual carts that they sell. And if I zoomed in on that picture, it's a very good price of only $9,999.99. But no, what I wanted to just say is that Glenn was fortunate enough to give us an actual store visit. We thought we would record this, and maybe, Glenn, you can walk through a little bit -- a bit of the store visit. And I think you can see some of the tech that's being used.

Sure. So this was taken at our Thompson Station store. So Shash and the SOTI team came visited us. That was our 500th Fusion store remodel. So we remodeled the inside of the store, the Side Lot and then we added a Garden Center with live goods. So you can see we're in the outside of the store. This is just right before Christmas that we visited the store, so you see it set for holiday. This is the consumer mobile app, the in-store mode, the ability to signal if you need a propane refill or your curbside order and you're picking up. You can see there on the Side Lot, we've got a drive-through where customers can just drive through, pick up their curbside order and we bring it right out to them. So that integration like with the app, the AI Theatro, we can take care of that customer very quickly. Here, we've got the Honeywell CT40 in the printer. [ Gabby ], who we met at Thompson Station was giving us overview of kind of how she's using mobile point-of-sale. We can do that propane refill right on the Side Lot, take care of the customer. We can take EMV, pin debit, Google Pay, Apple Pay, contactless forms of payment. And then also if they'd like a receipt, we can just print it right there and just take care of the customer. We're now walking from Side Lot into the Garden Center. So we've got the ability to sell seasonal products at the time we were there, we were set for holiday. And in the spring, we'll have garden products, a lot of live goods. And then here, we're walking through the inside of the store. You can see the types of products that we sell, like dog food, cat food, lots of feed, like chicken feed. And then -- I guess that's kind of the video.

Yes, I think one of the best parts that I enjoyed is new employees. So we weren't able to record actual live people in the store, but what I was impressed with is all of the new employees, they were extremely knowledgeable because of your Hey GURA artificial intelligence solution that they had. So they knew about everything that was going on in the store, out of the store, they could make -- and this is somebody that just started, I think, within 30 days. So that was pretty impressive. I would love for you to talk a little bit about...

Sure. So I mean there's AI throughout the store. When you look at the types of products that we sell, we use AI with Relex to do inventory planning to make sure the types of products that we have in the store, like we've got product availability, and we're making sure we support those customers in the local communities. It's a needs-based business. So it's important we've got T-Post, fencing, feed to take care of animals. The store team member is all powered by AI. We've got the integrations with Theatro, so for curbside pickup, for propane refills, it's all enabled through the app with in-store mode. We've, through SOTI, been able to push out applications very quickly to the team member devices. So it's not only doing mobile point-of-sale, it's doing trailer rentals. It's doing applications for our TSC Visa card, Neighbor's Club, product inventory, scanning, and a number of other applications. From a generative AI standpoint, we were able to move very quickly in the retail industry and enabling Gen AI solutions for our team members. Hey GURA is an example of that. We're leveraging Microsoft cloud, Open AI. We've trained the AI models with our Life Out Here knowledge. With the expertise of over 50,000 team members, we have accessible through Gen AI and being able to take care of customers. So with Hey GURA, team members can get immediate access to information about products, training information, inventory information, where like products located within a store. So it's an assistant to kind of help them take care of that customer. We want to have that legendary customer experience.

Yes. Thanks, Glenn. So the other question is where are we going? Where are we going together as a solution? And so from these kind of store visits, we're able to understand SOTI is a solution that's really behind the scenes, right? And we are focused on the cost, complexities, the downtime. So where we're going is we're introducing some new capabilities with Tractor Supply Company. Glenn talked a little bit about remote control and being able to troubleshoot, we want to provide more advanced diagnostics. So when you are troubleshooting an issue, our solution SOTI XSight, allows you to not only remote in and help a user in real time, but now it's embedded into a ticketing system automatically. And what that means is I can do other things, I can take a screenshot. I can record a video and all of this gets embedded into a ticket automatically. I can also do things like record a video with the user describing the problem. So when I'm troubleshooting an issue, I want to focus on first call resolution. And the only way I can do that is if I can grab as much data about that device as possible. We also thought about the idea of collaboration. So maybe the end user can draw on the screen. Maybe I can draw on the screen, and we can easily draw together to pinpoint exactly what that problem is for that end user because there might be a language barrier. All of these things are available to you in terms of advanced diagnostics. What if the problem is a little bit more complicated? Maybe the app developer needs log files. Normally, to get a log file from a device, you've got to plug it in, run a command prompt. With SOTI's technology, we actually have the ability to just press a single button, and we grab all the log files from the device automatically. It gets embedded into the ticket. Now I can actually troubleshoot and look at the logs right there in real time, understand exactly what's happening. Maybe it's just a simple missing a picture, missing an image. I want to give them a new version of our application. I can do all of that all in real time. Once again, our focus is really on first call resolution. What else are we doing? As you start using these Honeywell devices, the CT40s, you're going to start realizing that the battery becomes very, very important. Today, what companies do is they replace all the batteries, Glenn might have mentioned they're swappable batteries. You might replace all the batteries and all your devices because you want to avoid downtime. Some of these batteries eventually don't last a full shift. So with SOTI's technology, you're allowed -- you're able to actually provide a prediction engine. So we've built some AI capabilities and algorithms to get you historical data, and then we can predict future behavior around when your batteries are going to go bad. And then you'll see in this blue here, that's the prediction engine that's running. So what can I do here? I can simply tap on the batteries that are going red, which means they're going bad. And then I can see which particular batteries are bad. More importantly, I know where they are. If I simply tap on that particular battery, I can see exactly where that device is -- where the battery is, what devices it was in prior to where it is now because these swappable batteries go in and out of different devices all the time. In addition to that, we also work with the manufacturers such as Honeywell to actually go much deeper. I can find out things like the battery age, the capacity of the battery. The battery temperature, is it getting too cold or too hot, which applications are causing the drainage of the battery, your charge pattern, all this kind of deep information. So if you're looking for analytical insight, we have all of that information available. And lastly, it's about something called SOTI XSight Live View. Live View is a new capability that integrates data across all the different business applications that you have and gives you a single pane of glass to see everything. What you're looking at is a map and imagine these are drivers that are driving, they've got a mobile device and they're using different applications inside that device. Well, I've -- I can map any business data to this icon. This icon has got a marble, a disc and a ring. And what I can do is I can say, okay, red means bad for this particular business value. To give you an example, I'll just kind of click on one of these devices and the device will show me more information. I'll pick up the one that's red. And so red means that is bad. Why? In this case, it's a delivery status. The driver is behind by 25 minutes. When I tap on this particular value, I can see the chart, a chart that shows me a 2-hour window of all of the historical data related to that particular problem. I can do this for all business data. In this case, I'm also looking at, say, the delivery status and the speed. And now I can go back in time. I've got this wonderful time machine that allows me to go back in time and correlate all of the data across different business applications and help you solve and troubleshoot problems in real time. So in this case, the delivery status is behind, why? Because there was a massive increase in the inventory on the truck for fridges. So now I know a little bit more about what's going on, and this is visibility that I'm getting across all my devices in real time. So to end off here, SOTI offers a complete mobile and IoT life cycle management solution. What do we mean by that? I can help you rapidly provision devices. SOTI he can help you diagnose solutions. If your devices are getting lost or stolen, we help track all your assets and give you historical data up to 12 months. We help collect data so that we can actually predict behavior, future behavior. We do this across all different types of devices, Android, iOS, Windows, Linux, Chrome, macOS, any type of devices that you have. In addition, we also do printers, scanners, robots, Raspberry Pi, anything you can think of that's got some type of connection to the Internet, we can manage. We can help you build mobile applications as well. So if you're looking at paper-based processes, we help you build mobile apps, convert these forms, PDFs Excel spreadsheets. You don't have to use all those things. You can build mobile apps to help you automate and automate your workflows. And finally, we do this in a secure manner. Security is of utmost importance. We want to make sure that the right people are accessing the right devices at the right time. If you're interested in kind of seeing a live demonstration or learning a little bit more about Tractor Supply Company or SOTI, we're both at the booth at 6221 just over here. Otherwise, if you guys have any questions, we're open to answering any questions right now. Otherwise, thank you guys very much. Any questions? All good?

All right. Thanks, everyone.

Thank you guys very much.