Duncan Angove, CEO Blue Yonder

Blue Yonder, is one of the largest providers of supply chain software. They are a wholly owned subsidiary of Panasonic. They recently gave the industry analyst community an update on their business performance over the last year and their outlook for the year ahead. Duncan Angove, the CEO, and Corey Tollefson, the chief revenue officer, were the speakers.

Business Update

Mr. Angove characterized fiscal 2024 as a solid year. “The second half, in particular, was extraordinarily strong.” In the fourth quarter, “we delivered the second largest software bookings in the history of the company.” There were a lot of “exceptionally large deals.” That was driven, in part, by pivoting from selling point solutions to a set of applications on a common platform. When that occurs, the deal sizes grow. Deal size almost doubled year over year.

“The quarter was particularly impressive given, as you know, we were, a victim of a cyber ransomware event.”

Mr. Angove said there was “great momentum coming into this year. The market is voting with us,” not just in terms of having common applications on the same platform, but having those applications connected to a network.

Customers, he asserted, also want a single company accountable for everything. They don’t want Blue Yonder to design and test the software, then hand the implementation off to a system integrator, and then hand responsibilities back to Blue Yonder to maintain and upgrade the software. Blue Yonder is adding services personnel. This will drive “growth in the services business.”

Mr. Angove highlighted Blue Yonder’s projected growth in services. In contrast, Manhattan Associates, in its fourth quarter call, lowered its revenue growth target for the coming year based on slowing services business. Their well-respected CEO has since resigned.

The net of all this is that “we’re set up for double-digit growth again.” The company now has almost 10,000 employees and is hiring rapidly.

Product Line Growth

From an industry perspective, automotive was the fastest-growing vertical; it was up 56% year-over-year. Some of that was driven by the shift to electric vehicles, and some by changing tariff policies. Both are contributing to “a rewiring of the automotive supply chain industry.” The consumer goods manufacturing and grocery vertical was also “particularly strong.”

Blue Yonder’s warehouse management system solution is their top-selling application. For the second year in a row, it grew rapidly. Last year it grew 32% over the preceding year. WMS already had a large installed base. But the recent growth on top of their installed base means that they have close to 800 sites live in the cloud, which Mr. Angove asserts is three or four times their nearest competitor.

As a public cloud solution, tasks sent to workers and robots can be tracked. Two years ago, 2 million tasks were sent to the warehouse floor. Last year, it grew to 3.5 million. The company believes its Cloud warehouse execution system controls more robots than anyone but Amazon. In short, Blue Yonder has fully scaled its WMS cloud business.

While the revenue growth in transportation management was not discussed, their Cloud TMS business is growing. 12 months ago, 10 million monthly shipments occurred on their Cloud TMS. At the end of the year, that was up to 45 million shipments per month.

The acquisition of One Network in May has been particularly impactful for the TMS product line. Mr. Tollefson asserted. In “the last six months, we have not seen a single transportation deal that does not include network capability. That’s something that’s changed the complete DNA of our company. And imagine going forward, when we take some of that network thinking to other aspects of the business, whether it’s warehouse management or enterprise planning.”

In 2023, Blue Yonder acquired Doddle, an application for returns and reverse logistics. Returns, Mr. Tollefson pointed out, is an example of an application that must have the network at its core. The new yard management solution, the CEO added, “is computer vision and agent based. There’s no guard at the dock door anymore. It just reads the license plate and knows where to put it.”

Their category management product line – which includes space planning and assortment management – also grew rapidly. It was up 24% year-over-year.

Blue Yonder and Agentic AI

Blue Yonder announced they were working with Snowflake, a company providing an enterprise data fabric solution, “to transform access to disparate data for supply chain management” in March of 2022. ChatGPT, the generative AI solution that set off an arms race of enterprise companies investing heavily in AI, was not released until November of that year. That Snowflake partnership, which left several industry analysts puzzled at the time, now appears brilliant. It turns out data fabrics are the necessary foundation on which to build advanced agentic AI solutions. Mr. Angove explained it this way, “there’s power in having one unified data model with a knowledge graph and semantic understanding on it.”

Two years ago, Blue Yonder introduced advanced planning applications based on Agentic AI. Initially, this was a beta introduction where the company co-innovated solutions with select customers. Not surprisingly, this product line is growing very quickly, albeit from a small base. This business was up 5x year-over-year. The pipeline is described as “huge.”

Blue Yonder’s vision for agentic AI is to use AI to support supply chain execution. The AI core must “see events quickly, analyze them at machine speed,” allow for autonomous execution – if that is what a customer wants – and thus fully “close the loop with execution.”

“We’re now at the point where every week we’re ingesting a terabyte of data into the Data Cloud, and we’re running 20 billion machine learning predictions a day,” Mr. Angove exclaimed. “Back in May of last year, that number was 10 billion. So, it’s doubled in the space of nine months, and it’s probably going to double even faster” in the coming year.

Their progress in AI, the CEO believes, exemplifies the company’s ability “to innovate at pace.” 44 new patents were granted to the company last year, bringing the patent total to over 900. Mr. Tollefson said the company has spent $2 billion over the past two years in R&D – he is including the acquisitions in this.

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