We have audited SPS Commerce, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and related notes (collectively, the consolidated financial statements), and our report dated February 25, 2020, expressed an unqualified opinion on those consolidated financial statements.
The Company acquired the MAPADOC business during 2019, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, MAPADOC’s internal control over financial reporting associated with total assets of approximately 3% and total revenues of less than 1%, in the consolidated financial statements of the Company as of and for the year ended December 31, 2019. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the MAPADOC business.
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
SPS COMMERCE, INC. AND SUBSIDIARIES
Shares and per share data have been adjusted for all periods presented to reflect a two-for-one stock split effective August 22, 2019.
Shares and per share data have been adjusted for all periods presented to reflect a two-for-one stock split effective August 22, 2019.
Shares and per share data have been adjusted for all periods presented to reflect a two-for-one stock split effective August 22, 2019.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A – General
Business Description
SPS Commerce is a leading provider of cloud-based supply chain management solutions that make it easier for retailers, suppliers, distributors, and logistics firms to orchestrate the management of item data, order fulfillment, inventory control and sales analytics across all channels. Implementing and maintaining a suite of supply chain management capabilities is resource intensive and is not a core competency for most businesses.
The services offered by SPS Commerce eliminate the need for on-premise software and support staff by taking on that capability on the customer’s behalf. The solutions SPS Commerce provides enable our customers to increase their supply cycle agility, optimize their inventory levels and sell-through, reduce operational costs and gain increased visibility into customer orders, ensuring that suppliers, distributors, and logistics firms can satisfy retailer requirements.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SPS Commerce, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidated financial statements.
Effective January 1, 2019, we adopted the requirements of Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), and used the effective date as our date of initial application. Consequently, financial information was not updated and the disclosures required under the new standard were not provided for dates and periods before January 1, 2019. The new standard provides several optional practical expedients in transition. We elected the “package of practical expedients,” which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use of hindsight or the practical expedient pertaining to land easements, the latter not being applicable to us. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify, which means we will not recognize right-of-use (“ROU”) assets or lease liabilities for these leases. This includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all leases.
On July 25, 2019, we announced that our board of directors declared a two-for-one stock split of our common stock, effected in the form of a 100 percent stock dividend as of the record date on August 8, 2019. The stock split dividend was distributed on August 22, 2019. Earnings per share and weighted average shares outstanding are presented in this Annual Report on Form 10-K after the effect of the 100 percent stock dividend. The two-for-one stock split is reflected in the share amounts in all periods presented in this Annual Report on Form 10-K.
Foreign Currency Translation
The functional currency of our foreign operations is generally the applicable local currency. The functional currency is translated into U.S. dollars for balance sheet accounts using current exchange rates in effect as of the balance sheet date and for revenue and expense accounts using an average exchange rate during the fiscal year. The translation adjustments are deferred as a component of other comprehensive income within the consolidated statements of comprehensive income and the consolidated statements of stockholders' equity. Gains or losses resulting from transactions denominated in foreign currencies, if any, are included in other income (expense), net in our consolidated statements of comprehensive income.
51
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Business Combinations
We recognize the fair value of the assets acquired and the liabilities assumed at the acquisition date, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the amount of the assets acquired and the liabilities assumed.
Assets acquired include tangible and intangible assets. We use estimates and assumptions that we believe are reasonable as a part of the purchase price allocation, which includes the process to determine the value and useful lives of purchased intangible assets and the process to determine the value of any contingent consideration liabilities. We recorded the acquisition-date fair value of any contingent liabilities, such as earn-out provisions, as part of the consideration transferred. The earn-out liability fair value is subsequently remeasured at each reporting date. The Company evaluates each contingent consideration to determine the valuation approach. See Note E for valuation methods utilized in the fair value remeasurement as of the reporting date.
While we believe these estimates and assumptions are reasonable, they are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of the assets acquired and the liabilities assumed. Any such adjustments would be recorded as an offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair values, whichever comes first, any subsequent adjustments would be recorded in our consolidated statements of comprehensive income.
Segment Information
We operate in and report on one segment, which is supply chain management solutions.
Risk and Uncertainties
We rely on hardware and software licensed from third parties to offer our on-demand solutions. Our management believes alternate sources are available; however, disruption or termination of these relationships could adversely affect our operating results in the near term.
Concentration of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents in financial institutions in excess of federally insured limits and accounts receivable. Cash and cash equivalents are held with financial institutions that we believe are subject to minimal risk.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with original maturities of less than 90 days. Cash and cash equivalents are stated at fair value.
52
Investments
Management determines the appropriate classification of certificates of deposit and marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses, net of tax, reported as unrealized gains on investments on the consolidated statements of comprehensive income. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. When a determination has been made that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is realized and is included in other income (expense), net in the consolidated statements of comprehensive income.
Fair Value of Other Financial Instruments
The carrying amounts of our short-term financial instruments, which include cash, cash equivalents, accounts receivable, and accounts payable, approximates fair value due to their short-term nature. Marketable securities are recorded at fair value as further described in Note E.
Accounts Receivable
Accounts receivable are initially recorded upon the sale of solutions to customers. Credit is granted in the normal course of business without collateral. Accounts receivable are stated net of allowances for doubtful accounts, which represent estimated losses resulting from the inability of certain customers to make the required payments. When determining the allowances for doubtful accounts, we take several factors into consideration including the overall composition of the accounts receivable aging, our prior history of accounts receivable write-offs, the type of customers and our experience with specific customers. We write-off accounts receivable when they are determined to be uncollectible. Changes in the allowances for doubtful accounts are recorded as bad debt expense and are included in general and administrative expense in our consolidated statements of comprehensive income.
Property and Equipment
Property and equipment, including assets acquired under capital lease obligations, are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives when placed in service, which are:
Computer equipment and software: 2 to 3 years
Office equipment and furniture: 5 to 7 years
Leasehold improvements: the shorter of the useful life of the asset or the remaining term of the lease
Significant additions or improvements extending asset lives beyond one year are capitalized, while repairs and maintenance are charged to expense as incurred.
We capitalize and amortize eligible costs to acquire or develop internal-use software that are incurred during the application development stage. Costs incurred during the preliminary project stage and post-implementation stage are expensed as incurred. Internal-use software is depreciated over the estimated useful life, commencing on the date when the asset is ready for its intended use. Depreciation is computed using the straight-line method. Maintenance and enhancements of internal-use software are expensed as incurred.
The assets and related accumulated depreciation and amortization are adjusted for asset retirements and disposals and abandoned internal-use software with the resulting gain or loss included in our consolidated statements of comprehensive income.
53
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and long-term operating lease liabilities in our consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We estimate the discount rate for a similar collateralized asset by reviewing quoted costs of borrowing. We use the implicit interest rate when readily determinable. The operating lease ROU asset also includes any lease payments made and lease incentives that have been incurred. The options to extend our leases are not recognized as part of our ROU assets and lease liabilities unless it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For all leases, we combine non-lease components with the related lease components and account for it as a single lease component. The ROU assets are subject to the same impairment process as our long-lived assets. Additionally, we review our lease liabilities for remeasurement whenever there is a triggering event or when relevant facts and circumstances change.
Research and Development
Research and development costs primarily include maintenance and data conversion activities related to our cloud-based supply chain management solutions and are expensed as incurred.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. We test goodwill for impairment annually at November 30, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test is conducted by comparing the fair value of the net assets with the carrying amount of the reporting unit. We determine the fair value of the reporting unit based on our market capitalization at the testing date. If the carrying amount of the goodwill exceeds the fair value of the reporting unit, goodwill may be impaired. If this occurs, the fair value is then allocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of goodwill. This implied fair value is then compared to the carrying amount of goodwill and, if it is less, we would recognize an impairment loss in the consolidated statements of comprehensive income.
Intangible Assets
Assets acquired in business combinations may include identifiable intangible assets such as subscriber relationships, developed technology, and non-competition agreements. We recognize separately from goodwill the fair value of the identifiable intangible assets acquired. We have determined the fair value and useful lives of our purchased intangible assets using certain estimates and assumptions that we believe are reasonable.
The purchased intangible assets are being amortized on a straight-line basis over their estimated useful lives, which are seven to ten years for subscriber relationships, three to five years for non-competition agreements and three to ten years for technology.
Third Party Implementation Assets
Third party implementation costs are capitalized assets included in Other Assets and relate to implementation costs incurred for software hosting arrangements.
Capitalized implementation costs are recognized on a straight-line basis beginning when the application is ready for its intended use and ending on the expected termination date of the hosting arrangement, including consideration of the noncancelable contractual term and reasonably certain renewals.
The terms are between four and six years for our current hosting arrangements. Recognized expense is reported in general and administrative expense, which is where the hosting arrangement subscriptions are reported.
54
Impairment of Long-Lived Assets
We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The carrying amount of a long-lived asset is not recoverable if the carrying amount of an asset group exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the assets at the date it is tested for recoverability, whether in use or under development. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value.
Revenue Recognition
Revenues are recognized when our services are made available to our customers, in an amount that reflects the consideration we are contractually and legally entitled to in exchange for those services.
We determine revenue recognition through the following steps:
|
-
|
Identification of the contract, or contracts, with a customer
|
|
-
|
Identification of the performance obligations in the contract
|
|
-
|
Determination of the transaction price
|
|
-
|
Allocation of the transaction price to the performance obligations in the contract
|
|
-
|
Recognition of revenue when, or as, we satisfy a performance obligation
|
See Note C for further descriptions of our revenue recognition policy.
Deferred Costs
Deferred costs consist of costs to obtain customer contracts, such as commissions paid to sales personnel and to third-party partners for customer referrals, and costs to fulfill customer contracts, such as customer implementation costs.
Sales commissions relating to recurring revenues are considered incremental and recoverable costs of obtaining a contract with our customer. These commissions are calculated based on estimated annual recurring revenue to be generated over the customer’s initial contract period. These costs are deferred and amortized over the expected period of benefit, which we have determined to be two years. Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of comprehensive income.
Customer implementation costs are considered incremental and recoverable costs of obtaining a contract with our customer. These costs are deferred and amortized over the expected period of benefit, which we have determined to be two years. Amortization expense is included in cost of revenues in the accompanying consolidated statements of comprehensive income.
Stock-Based Compensation
We recognize the cost of all share-based payments to employees, executive officers, and non-employee members of the Company’s Board of Directors, including grants of stock options, performance share units (“PSUs”), restricted stock units (“RSUs”), restricted stock awards (“RSAs”), and 401(k) stock match in the consolidated financial statements based on the grant date fair value of those awards. This cost is recognized over the period for which an employee is required to provide service in exchange for the award.
In valuing share-based awards, judgment is required in determining the expected volatility of common stock and the expected term individuals will hold their share-based awards prior to exercising. The expected volatility of the options is based on the historical volatility of our common stock. The expected term of the options is based on the simplified method, which does not consider historical employee exercise behavior. We recognize forfeitures as they occur.
55
Income Taxes
We account for income taxes using the asset and liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in our judgement, it is more likely than not that some or all of the deferred tax asset will not be realized.
We assess our ability to realize our deferred tax assets at the end of each reporting period. Realization of our deferred tax assets is contingent upon future taxable earnings. Accordingly, this assessment requires estimates and judgment. If the estimates of future taxable income vary from actual results, our assessment regarding the realization of these deferred tax assets could change. Future changes in the estimated amount of deferred taxes expected to be realized will be reflected in our consolidated financial statements in the period the estimate is changed, with a corresponding adjustment to our operating results.
We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would “more likely than not” sustain the position following an audit. For tax positions meeting the “more likely than not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.
Net Income Per Share
Basic net income per share has been computed using the weighted average number of shares of common stock outstanding during each period. Diluted net income per share also includes the impact of our outstanding potential common shares, including options, RSUs, RSAs, and PSUs. Potential common shares that are anti-dilutive are excluded from the calculation of diluted net income per share.
56
Recently Adopted Accounting Pronouncements
Standard
|
|
Date of Issuance
|
|
Description
|
|
Date Adopted
|
|
Effect on the Financial Statements
|
ASU 2016-02, Leases and all related amendments
|
|
February
2016
|
|
Requires all leases with a term greater than 12 months to be recognized in the statements of financial position and eliminates current real estate-specific lease guidance, while maintaining substantially similar classification criteria for distinguishing between finance leases and operating leases.
|
|
January
2019
|
|
The adoption of this standard and related amendments resulted in the recognition of approximately $15.7 million in right-of-use assets and lease liabilities on our balance sheet as of January 1, 2019. Comparative periods will continue to be measured and presented under historical guidance, and only the period of adoption and future periods will be subject to this ASU. There was no cumulative effect on retained earnings or other components of equity at the adoption date. For more information see Note J.
|
ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220)
|
|
February
2018
|
|
Allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cut and Jobs Act of 2017 and requires certain disclosures regarding stranded tax effects in accumulated other comprehensive income.
|
|
January
2019
|
|
The adoption of this standard did not have a material impact on our consolidated financial statements.
|
57
Accounting Pronouncements Not Yet Adopted
Standard
|
|
Date of Issuance
|
|
Description
|
|
Date of Required Adoption
|
|
Effect on the Financial Statements
|
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements
|
|
June
2016
|
|
The amendment in this update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses.
|
|
January 2020
|
|
We have evaluated the requirements of this standard on our financial assets and have concluded that the adoption of this ASU, beginning January 1, 2020, will not have a material impact on our consolidated financial statements.
|
ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement
|
|
August 2018
|
|
This ASU adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement.
|
|
January 2020
|
|
The adoption of this standard will not have a material impact on our consolidated financial statements.
|
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment
|
|
January 2017
|
|
This amendment eliminates Step 2 from the goodwill impairment test.
|
|
January 2020
|
|
The adoption of this standard will not have a material impact on our consolidated financial statements.
|
58
NOTE B – Business Acquisitions
MAPADOC
On August 26, 2019, we completed our asset acquisition of the MAPADOC business, an operating unit of SWK Technologies, Inc., a leading provider of EDI System Automation solutions for the Sage and Acumatica markets. Pursuant to the asset purchase agreement, the purchase price is $11.8 million. The purchase accounting, purchase price allocation, and net working capital adjustment for the MAPADOC acquisition were finalized during the fourth quarter of 2019.
Purchase Price Allocation
We accounted for the acquisition as a business combination. We allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. We engaged a third-party valuation firm to assist us in the determination of the value of the purchased intangible assets. The excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. Goodwill is attributed to a trained workforce and other buyer-specific value resulting from expected synergies, including long-term cost savings, which are not included in the fair values of identifiable assets.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Current assets
|
|
$
|
659
|
|
Goodwill
|
|
|
6,372
|
|
Intangible assets
|
|
|
5,000
|
|
Deferred revenue
|
|
|
(225
|
)
|
|
|
$
|
11,806
|
|
Purchased Intangible Assets
The following table summarizes the estimated fair value of the purchased intangible assets and their estimated useful lives:
|
|
Estimated
|
|
|
Estimated
|
|
|
|
Fair Value
|
|
|
Life
|
|
Purchased Intangible Assets
|
|
(in thousands)
|
|
|
(in years)
|
|
Developed technology
|
|
$
|
3,600
|
|
|
|
8
|
|
Subscriber relationships
|
|
|
1,400
|
|
|
|
8
|
|
|
|
$
|
5,000
|
|
|
|
|
|
The purchased intangible assets are being amortized on a straight-line basis over their estimated useful lives. Amortization expense for the period from August 26, 2019 through December 31, 2019 was $0.2 million.
EDIAdmin
On October 3, 2018, we completed our asset acquisition of EDIAdmin, a privately held company providing end-to-end integration solutions, featuring a dedicated Integration Platform as a Service (“iPaaS”) called Cloud Hybrid Integration Platform (“CHIP”) and collaborative managed services for leading systems and applications, both cloud and on-premise. Pursuant to the asset purchase agreement, we paid $7.5 million in cash to the owner of EDIAdmin. The purchase accounting for the EDIAdmin acquisition was complete as of December 31, 2018. The purchase agreement also allowed the seller to receive up to $1.7 million in cash, which becomes payable in the first quarter of 2020 and 2021, contingent upon the completion of certain revenue milestones at December 31, 2019 and December 31, 2020. During the year ended December 31, 2019, we recognized other income of $0.4 million in our consolidated statements of comprehensive income due to the remeasurement of the contingent liability. In 2020, we expect to pay $0.5 million for the completion of certain revenue milestones at December 31, 2019. The fair value of the remaining contingent consideration was $0.4 million at December 31, 2019. See Note E for further disclosures on the remeasurement of the contingent liability.
59
CovalentWorks
On December 18, 2018, we completed our asset acquisition of CovalentWorks, a privately held company providing cloud-based EDI solutions to small- and medium-sized businesses. Pursuant to the asset purchase agreement, we paid $19.4 million in cash and issued $3.4 million in common stock, or 80,956 shares, as adjusted for our two-for-one stock split effective August 22, 2019, to the owners of CovalentWorks. The purchase accounting, purchase price allocation, and net working capital adjustment for the CovalentWorks acquisition were finalized during the first quarter of 2019.
NOTE C – Revenue
We derive our revenues primarily from the following revenue streams (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Recurring revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fulfillment
|
|
$
|
219,297
|
|
|
$
|
190,783
|
|
|
$
|
164,682
|
|
Analytics
|
|
|
37,038
|
|
|
|
34,447
|
|
|
|
34,260
|
|
Other
|
|
|
5,671
|
|
|
|
5,424
|
|
|
|
4,978
|
|
Recurring Revenues
|
|
|
262,006
|
|
|
|
230,654
|
|
|
|
203,920
|
|
One-time revenues
|
|
|
17,118
|
|
|
|
17,586
|
|
|
|
16,165
|
|
|
|
$
|
279,124
|
|
|
$
|
248,240
|
|
|
$
|
220,085
|
|
Revenues are recognized when our services are made available to our customers, in an amount that reflects the consideration we are contractually and legally entitled to in exchange for those services.
We determine revenue recognition through the following steps:
|
-
|
Identification of the contract, or contracts, with a customer
|
|
-
|
Identification of the performance obligations in the contract
|
|
-
|
Determination of the transaction price
|
|
-
|
Allocation of the transaction price to the performance obligations in the contract
|
|
-
|
Recognition of revenue when, or as, we satisfy a performance obligation
|
Recurring Revenues
Recurring revenues consist of recurring subscriptions from customers that utilize our Fulfillment, Analytics and Other cloud-based supply chain management solutions. Revenue for these solutions is generally recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our contracts with our recurring revenue customers are recurring in nature, ranging from monthly to annual, and generally allow the customer to cancel the contract for any reason with 30 to 90 days’ notice. Timing of billings varies by customer and by contract type and are either in advance or within 30 days of the service being performed.
The deferred revenue liabilities for recurring revenue contracts are for one year or less and recognized on a ratable basis over the contract term. We have applied the optional exemption under Accounting Standards Codification (“ASC”) 606-10-50-14(a) and will not disclose information about the remaining performance obligations for contracts which have original durations of one year or less.
60
One-time Revenues
One-time revenues consist of set-up fees from customers and miscellaneous one-time fees.
Set-up fees are specific for each connection a customer has with a trading partner and many of our customers have connections with numerous trading partners. Set-up fees related to our cloud-based supply chain management solutions are nonrefundable upfront fees that are necessary for our customers to utilize our cloud-based services. These set-up fees do not provide any standalone value to our customers.
Certain contracts contain set-up fees that constitute a material renewal option right. This material right provides customers a significant future incentive that would not be otherwise available to that customer unless they entered into the contract, as the set-up fees will not be incurred again upon contract renewal.
For our Fulfillment solution, we have determined that the set-up fees and related costs represent a material renewal option right to our customers as they will not be incurred again upon renewal. These set-up fees and related costs are deferred and recognized ratably over two years, which is the estimated period for which a material right is present for our customers.
For our Analytics solution, we have determined that the set-up fees do not represent a material customer renewal right and, as such, are deferred and recognized ratably over the estimated initial contract term, which is generally one year.
The table below presents the activity of the portion of the deferred revenue liability relating to set-up fees (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Balances, at beginning of the year
|
|
$
|
9,857
|
|
|
$
|
10,031
|
|
Invoiced set-up fees
|
|
|
11,056
|
|
|
|
10,271
|
|
Amortized set-up fees
|
|
|
(10,395
|
)
|
|
|
(10,445
|
)
|
Balances, at end of the year
|
|
$
|
10,518
|
|
|
$
|
9,857
|
|
The entire balance of set-up fees will be recognized within two years and, as such, current amounts will be recognized in the next 1-12 months and long-term amounts will be recognized in the next 13-24 months.
Miscellaneous one-time fees consist of professional services and testing and certification. The deferred revenue liability for these one-time fees are for one year or less and recognized at the time service is provided. We have applied the optional exemption under ASC 606-10-50-14(a) to not disclose information about the remaining performance obligations for contracts which have original durations of one year or less.
NOTE D – Deferred Costs
Deferred costs consist of costs to obtain customer contracts, such as commissions paid to sales personnel and to third-party partners for customer referrals, and costs to fulfill customer contracts, such as customer implementation costs.
Costs to obtain customer contracts relating to recurring revenues are considered incremental and recoverable costs of obtaining a contract with our customer. These costs are deferred and amortized over the expected period of benefit which we have determined to be two years. Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of comprehensive income.
Costs to fulfill customer contracts are considered incremental and recoverable costs of obtaining a contract with our customer. These costs are deferred and amortized over the expected period of benefit which we have determined to be two years. Amortization expense is included in cost of revenues in the accompanying consolidated statements of comprehensive income.
61
The table below presents the activity of deferred costs and amortization of deferred costs (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Balances, at beginning of the year
|
|
$
|
45,475
|
|
|
$
|
39,933
|
|
Incurred deferred costs
|
|
|
49,883
|
|
|
|
49,583
|
|
Amortized deferred costs
|
|
|
(48,417
|
)
|
|
|
(44,041
|
)
|
Balances, at end of the year
|
|
$
|
46,941
|
|
|
$
|
45,475
|
|
NOTE E – Financial Instruments
We invest primarily in money market funds, certificates of deposit, highly liquid debt instruments of the U.S. government and U.S. corporate debt securities. All highly liquid investments with original maturities of 90 days or less are classified as cash equivalents. All investments with original maturities greater than 90 days and remaining maturities less than one year from the balance sheet date are classified as short-term investments. As of December 31, 2019 and 2018, all of our investments held were classified as short-term.
Our short-term marketable securities are classified as available-for-sale. We intend to hold marketable securities until maturity; however, we may sell these securities at any time for use in current operations or for other purposes.
Our marketable securities are carried at fair value and unrealized gains and losses on these investments, net of taxes, are included in accumulated other comprehensive loss in the consolidated balance sheets. Realized gains or losses are included in other income (expense), net in the consolidated statements of comprehensive income. When a determination has been made that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is realized and is included in other income (expense), net in the consolidated statements of comprehensive income.
Cash equivalents and short-term investments consisted of the following (in thousands):
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains, net
|
|
|
Value
|
|
|
Cost
|
|
|
Gains, net
|
|
|
Value
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
151,266
|
|
|
$
|
—
|
|
|
$
|
151,266
|
|
|
$
|
109,265
|
|
|
$
|
—
|
|
|
$
|
109,265
|
|
Certificate of deposit
|
|
|
7,030
|
|
|
|
—
|
|
|
|
7,030
|
|
|
|
7,000
|
|
|
|
—
|
|
|
|
7,000
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
9,785
|
|
|
|
20
|
|
|
|
9,805
|
|
|
|
15,194
|
|
|
|
40
|
|
|
|
15,234
|
|
Commercial paper
|
|
|
7,503
|
|
|
|
—
|
|
|
|
7,503
|
|
|
|
9,889
|
|
|
|
76
|
|
|
|
9,965
|
|
U.S. treasury securities
|
|
|
9,855
|
|
|
|
91
|
|
|
|
9,946
|
|
|
|
12,300
|
|
|
|
38
|
|
|
|
12,338
|
|
|
|
$
|
185,439
|
|
|
$
|
111
|
|
|
$
|
185,550
|
|
|
$
|
153,648
|
|
|
$
|
154
|
|
|
$
|
153,802
|
|
Due within one year
|
|
|
|
|
|
|
|
|
|
$
|
185,550
|
|
|
|
|
|
|
|
|
|
|
$
|
153,802
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
185,550
|
|
|
|
|
|
|
|
|
|
|
$
|
153,802
|
|
62
As of December 31, 2019, we had less than $0.1 million of unrealized losses and we do not believe any of these unrealized losses represent an other-than-temporary impairment based on our assessment of available evidence. We expect to receive the full principal and interest on all of these cash equivalents, certificates of deposit, and marketable securities.
Recurring Fair Value Measurements
We measure certain financial assets at fair value on a recurring basis based on a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are:
|
•
|
Level 1 – quoted prices in active markets for identical assets or liabilities.
|
|
•
|
Level 2 – observable inputs other than Level 1 prices, such as (a) quoted prices for similar assets or liabilities, (b) quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or (c) model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
•
|
Level 3 – unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
|
We obtain the fair values of our level 2 available-for-sale securities from a professional pricing service.
For the earn-out liability related to the EDIAdmin acquisition, the Company utilized the Monte Carlo simulation method to estimate the fair value of this contingent liability as of the reporting date. Thousands of iterations of the simulation were performed using forecasted revenues to develop a distribution of future values of recurring revenue which, in turn, provide indicated earn-out payments. The total estimated fair value equals the sum of the average present values of the indicated earn-out payments. Changes in assumptions described above could have an impact on the payout of contingent consideration with a maximum payout being $1.7 million.
63
The following table presents information about our financial assets that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in thousands):
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
151,266
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
151,266
|
|
Certificate of deposit
|
|
|
7,030
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,030
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
—
|
|
|
|
9,805
|
|
|
|
—
|
|
|
|
9,805
|
|
Commercial paper
|
|
|
—
|
|
|
|
7,503
|
|
|
|
—
|
|
|
|
7,503
|
|
U.S. treasury securities
|
|
|
—
|
|
|
|
9,946
|
|
|
|
—
|
|
|
|
9,946
|
|
|
|
$
|
158,296
|
|
|
$
|
27,254
|
|
|
$
|
—
|
|
|
$
|
185,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earn-out liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
405
|
|
|
$
|
405
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
405
|
|
|
$
|
405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets at December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
109,265
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
109,265
|
|
Certificate of deposit
|
|
|
7,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,000
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
—
|
|
|
|
15,234
|
|
|
|
—
|
|
|
|
15,234
|
|
Commercial paper
|
|
|
—
|
|
|
|
9,965
|
|
|
|
—
|
|
|
|
9,965
|
|
U.S. treasury securities
|
|
|
—
|
|
|
|
12,338
|
|
|
|
—
|
|
|
|
12,338
|
|
|
|
$
|
116,265
|
|
|
$
|
37,537
|
|
|
$
|
—
|
|
|
$
|
153,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities at December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earn-out liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,368
|
|
|
$
|
1,368
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,368
|
|
|
$
|
1,368
|
|
The portion of the earn-out liability expected to be paid in the first quarter of 2020 has been determined to be $0.5 million, given the completion of certain revenue milestones for the year ending December 31, 2019. As such, $0.5 million of the earn-out consideration is included in accrued expenses in the consolidated balance sheet at December 31, 2019 and transferred from the Level 3 earn-out liability measured at fair value. The remaining earn-out liability is expected to be paid in the first quarter of 2021 and has been measured as Level 3 given the unobservable inputs that are significant to the measurement of the liability. Other than the transfer relating to the EDIAdmin contingent consideration, there were no other transfers in or out of our Level 1, 2, or 3 assets or liabilities during the years ended December 31, 2019 and 2018.
Nonrecurring Fair Value Measurements
The Company measures certain assets and liabilities at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include long-lived assets, goodwill and indefinite-lived intangible assets, which would generally be recorded at fair value as a result of an impairment charge. Assets acquired and liabilities assumed as part of business combinations are measured at fair value. For additional information on the Company's business combinations and the related nonrecurring fair value measurement of the assets acquired and liabilities assumed, refer to “Note B, Business Acquisitions”.
64
NOTE F – Allowance for Doubtful Accounts
The allowance for doubtful accounts activity, included in accounts receivable, net, was as follows (in thousands):
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Balance, January 1
|
|
$
|
1,392
|
|
|
$
|
763
|
|
|
$
|
515
|
|
Provision for doubtful accounts
|
|
|
3,499
|
|
|
|
2,590
|
|
|
|
1,705
|
|
Write-offs, net of recoveries
|
|
|
(3,422
|
)
|
|
|
(1,961
|
)
|
|
|
(1,457
|
)
|
Balance, December 31
|
|
$
|
1,469
|
|
|
$
|
1,392
|
|
|
$
|
763
|
|
NOTE G – Property and Equipment, net
Property and equipment, net included the following (in thousands):
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Computer equipment and software
|
|
$
|
54,030
|
|
|
$
|
44,781
|
|
Office equipment and furniture
|
|
|
9,205
|
|
|
|
7,985
|
|
Leasehold improvements
|
|
|
11,091
|
|
|
|
9,366
|
|
|
|
|
74,326
|
|
|
|
62,132
|
|
Less: accumulated depreciation and amortization
|
|
|
(50,574
|
)
|
|
|
(41,175
|
)
|
|
|
$
|
23,752
|
|
|
$
|
20,957
|
|
Depreciation and amortization expense of property and equipment, net for fiscal 2019, 2018, and 2017 was $11.1 million, $8.6 million, and $7.2 million, respectively. At December 31, 2019 and 2018, property and equipment, net included approximately $2.0 million and $1.7 million, respectively, of assets held at subsidiary and office locations outside of the U.S.
NOTE H – Goodwill and Intangible Assets, net
The changes in the net carrying amount of goodwill for the years ended December 31, 2019 and 2018 are as follows (in thousands):
|
|
2019
|
|
|
2018
|
|
Balance, January 1
|
|
$
|
69,658
|
|
|
$
|
51,613
|
|
Additions from business acquisitions
|
|
|
6,372
|
|
|
|
20,272
|
|
Foreign currency translation
|
|
|
815
|
|
|
|
(2,227
|
)
|
Balance, December 31
|
|
$
|
76,845
|
|
|
$
|
69,658
|
|
There were no impairment losses in relation to goodwill for the periods presented.
Intangible assets, net included the following (in thousands):
|
|
December 31, 2019
|
|
|
|
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Foreign
Currency
Translation
|
|
|
Net
|
|
Subscriber relationships
|
|
$
|
43,640
|
|
|
$
|
(27,287
|
)
|
|
$
|
214
|
|
|
$
|
16,567
|
|
Non-competition agreements
|
|
|
2,495
|
|
|
|
(2,371
|
)
|
|
|
10
|
|
|
|
134
|
|
Technology
|
|
|
8,602
|
|
|
|
(2,643
|
)
|
|
|
8
|
|
|
|
5,967
|
|
|
|
$
|
54,737
|
|
|
$
|
(32,301
|
)
|
|
$
|
232
|
|
|
$
|
22,668
|
|
65
|
|
December 31, 2018
|
|
|
|
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Foreign
Currency
Translation
|
|
|
Net
|
|
Subscriber relationships
|
|
$
|
43,212
|
|
|
$
|
(23,284
|
)
|
|
$
|
(623
|
)
|
|
$
|
19,305
|
|
Non-competition agreements
|
|
|
2,560
|
|
|
|
(2,247
|
)
|
|
|
(28
|
)
|
|
|
285
|
|
Technology
|
|
|
5,199
|
|
|
|
(2,012
|
)
|
|
|
(36
|
)
|
|
|
3,151
|
|
|
|
$
|
50,971
|
|
|
$
|
(27,543
|
)
|
|
$
|
(687
|
)
|
|
$
|
22,741
|
|
The estimated annual amortization expense related to intangible assets subject to amortization for the next five years and thereafter is as follows (in thousands):
2020
|
|
$
|
5,359
|
|
2021
|
|
|
4,518
|
|
2022
|
|
|
3,415
|
|
2023
|
|
|
3,342
|
|
2024
|
|
|
2,101
|
|
Thereafter
|
|
|
3,933
|
|
|
|
$
|
22,668
|
|
NOTE I – Other Assets
The changes in the net amount of capitalized implementation costs for software hosting arrangements for the years ended December 31, 2019 and 2018 are as follows (in thousands):
|
|
2019
|
|
|
2018
|
|
Balance, January 1
|
|
$
|
455
|
|
|
$
|
—
|
|
Capitalized implementation fees
|
|
|
797
|
|
|
|
455
|
|
Amortization of implementation fees
|
|
|
(86
|
)
|
|
|
—
|
|
Balance, December 31
|
|
$
|
1,166
|
|
|
$
|
455
|
|
There were no impairment losses in relation to the capitalized implementation costs for the periods presented.
NOTE J – Leases
We are obligated under non-cancellable operating leases, primarily for office space and certain equipment, as follows:
|
|
December 31, 2019
|
|
|
|
Remaining Term
|
|
|
Right-of-Use Asset
|
|
|
|
(in years)
|
|
|
(in thousands)
|
|
Minneapolis, MN lease
|
|
|
5
|
|
|
$
|
10,704
|
|
Kiev, Ukraine lease
|
|
|
5
|
|
|
|
2,316
|
|
Little Falls, NJ lease
|
|
|
4
|
|
|
|
1,574
|
|
Other leases
|
|
<1 - 5
|
|
|
|
1,150
|
|
|
|
|
|
|
|
$
|
15,744
|
|
66
Some of our leases may include options to extend the leases for up to five years. The options to extend our leases are not recognized as part of our ROU assets and lease liabilities as it is not reasonably certain that we will exercise those options. Additionally, our agreements do not include options to terminate the leases.
In December 2017, we executed the fourth amendment to our lease agreement for our current headquarters located in Minneapolis, Minnesota where we lease approximately 189,000 square feet under an agreement that expires on April 30, 2025. We have agreed to expand our headquarters by approximately 25,000 square feet during 2020. Our lease agreement also includes a further expansion right and a right of first offer to lease certain additional space and two options to extend the term of the lease for five years at a market rate determined in accordance with the lease. Incentives of $9.9 million are included as a lease component.
In December 2019, we executed a lease agreement for a new Kiev, Ukraine location, where we lease approximately 17,000 square feet under an agreement that expires on May 31, 2025. The lease includes a right of first offer to lease certain additional space and one option to extend the term for five years and six months at a market rate determined in accordance with the lease. Under a separate lease agreement, we lease approximately 10,000 square feet under an agreement that expires on April 26, 2020, which we will not be renewing upon termination.
In February 2016, we executed the first amendment to our lease agreement for our Little Falls, New Jersey location where we lease approximately 26,000 square feet under an agreement that expires on June 30, 2023. The agreement includes an option to extend the term of the lease for five years at a market rate determined in accordance with the lease. Incentives of $0.9 million are included as a lease component.
The components of lease expense were as follows (in thousands):
|
|
Year Ended
|
|
|
|
December 31, 2019
|
|
Operating lease cost
|
|
$
|
2,569
|
|
Variable lease cost
|
|
|
3,390
|
|
|
|
$
|
5,959
|
|
Operating lease cost for short-term leases was not material for the year ended December 31, 2019.
Rent expense for all operating leases, which includes minimum lease payments and other charges such as common area maintenance fees, charged to operations was as follows (in millions):
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Rent expense
|
|
$
|
5,577
|
|
|
$
|
4,941
|
|
Supplemental cash flow information related to leases was as follows (in thousands):
|
|
Year Ended
December 31, 2019
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
4,383
|
|
ROU assets obtained in exchange for operating lease liabilities
|
|
$
|
2,537
|
|
The ROU assets obtained in exchange for operating lease liabilities excludes the transition amount of $15.7 million.
Supplemental balance sheet information related to leases was as follows:
|
|
December 31, 2019
|
|
Weighted-average remaining lease term - operating leases
|
|
5.0 years
|
|
Weighted-average discount rate - operating leases
|
|
|
4.5
|
%
|
67
At December 31, 2019, our future minimum payments under operating leases were as follows (in thousands):
2020
|
|
$
|
4,595
|
|
2021
|
|
|
5,600
|
|
2022
|
|
|
5,091
|
|
2023
|
|
|
4,903
|
|
2024
|
|
|
4,651
|
|
Thereafter
|
|
|
1,604
|
|
|
|
|
26,444
|
|
Less: imputed interest
|
|
|
(2,576
|
)
|
|
|
$
|
23,868
|
|
At December 31, 2018, our future minimum payments under operating leases were as follows (in thousands):
2019
|
|
$
|
4,209
|
|
2020
|
|
|
3,542
|
|
2021
|
|
|
4,414
|
|
2022
|
|
|
4,042
|
|
2023
|
|
|
3,854
|
|
Thereafter
|
|
|
4,817
|
|
|
|
$
|
24,878
|
|
NOTE K – Contingencies
We may be involved in various claims and legal actions in the normal course of business. We believe that the outcome of any such claim or legal action is not expected to have a material effect on our financial position, results of operations or cash flows.
NOTE L – Stockholders’ Equity
Stock Split
On August 22, 2019, we effected a two-for-one stock split of our common stock. There was no change in the number of our authorized common shares. All share and per share data have been adjusted for all periods presented to reflect the stock split.
Common Stock Issued
In connection with the acquisition of CovalentWorks (see Note B), we issued 80,956 shares of SPS Commerce common stock, as adjusted for our two-for-one stock split effective August 22, 2019, as calculated according to the terms of the purchase agreement. The fair value of the shares we issued of approximately $3.4 million was determined using the closing price of our common stock on December 18, 2018, the closing date of the transaction.
Stock Repurchase Program
On November 2, 2017, our board of directors authorized a program to repurchase up to $50.0 million of common stock. Under this program, we repurchased 417,564 shares at a cost of $20.6 million and 579,490 shares at a cost of $19.9 million for the years ended December 31, 2019 and 2018, respectively. On November 2, 2019, $3.7 million expired from the November 2, 2017 repurchase program. Shares have been adjusted for all periods to reflect a two-for-one stock split effective August 22, 2019.
On November 2, 2019, our board of directors authorized a new program to repurchase up to $50 million of common stock. Under the program, purchases may be made from time to time in the open market over two years. As of December 31, 2019, $50.0 million of the share repurchase authorized was available for future share repurchases.
68
NOTE M – Stock-Based Compensation
Our equity compensation plans provide for the grant of incentive and nonqualified stock options, as well as other stock-based awards including restricted stock and RSUs, to employees, non-employee directors and other consultants who provide services to us. RSAs result in the issuance of new shares when granted. For other stock-based awards, new shares are issued when the award is exercised, vested or released according to the terms of the agreement. In February 2019, January 2018 and February 2017, 2,081,488, 2,055,240 and 2,049,736 additional shares, respectively, were reserved for future issuance under our 2010 Equity Incentive Plan. At December 31, 2019, there were approximately 12.1 million shares available for grant under approved equity compensation plans.
During the year ended December 31, 2017, stock-based compensation expense included a one-time $3.6 million charge due to a modification to our Chief Executive Officer’s employment agreement which resulted in immediate vesting, and expensing, of his outstanding stock-based compensation awards based on his retirement eligibility. Stock-based compensation expense was allocated as follows (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Cost of revenues
|
|
$
|
2,819
|
|
|
$
|
2,168
|
|
|
$
|
1,887
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
2,946
|
|
|
|
2,675
|
|
|
|
2,197
|
|
Research and development
|
|
|
2,651
|
|
|
|
1,505
|
|
|
|
949
|
|
General and administrative
|
|
|
6,274
|
|
|
|
6,162
|
|
|
|
7,694
|
|
Total stock-based compensation expense
|
|
$
|
14,690
|
|
|
$
|
12,510
|
|
|
$
|
12,727
|
|
Stock-based compensation expense by type was as follows (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Stock Options
|
|
$
|
3,211
|
|
|
$
|
3,355
|
|
|
$
|
5,223
|
|
Performance Share Units
|
|
|
1,379
|
|
|
|
1,034
|
|
|
|
—
|
|
Restricted Stock Units
|
|
|
7,553
|
|
|
|
5,930
|
|
|
|
6,526
|
|
Restricted Stock Awards
|
|
|
519
|
|
|
|
487
|
|
|
|
318
|
|
Employee Stock Purchase Plan
|
|
|
701
|
|
|
|
466
|
|
|
|
660
|
|
401K Stock Match
|
|
|
1,327
|
|
|
|
1,238
|
|
|
|
—
|
|
Total stock-based compensation expense
|
|
$
|
14,690
|
|
|
$
|
12,510
|
|
|
$
|
12,727
|
|
69
As of December 31, 2019, there was approximately $18.7 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 2.5 years.
Stock Options
Stock options generally vest over four years and have a contractual term of seven to ten years from the date of grant. Our stock option activity was as follows:
|
|
|
|
|
|
Weighted Average
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
|
(#)
|
|
|
($/share)
|
|
Outstanding at December 31, 2016
|
|
|
2,032,024
|
|
|
|
22.36
|
|
Granted
|
|
|
345,394
|
|
|
|
27.94
|
|
Exercised
|
|
|
(131,004
|
)
|
|
|
10.77
|
|
Forfeited
|
|
|
(51,752
|
)
|
|
|
27.97
|
|
Outstanding at December 31, 2017
|
|
|
2,194,662
|
|
|
|
23.80
|
|
Granted
|
|
|
362,944
|
|
|
|
29.94
|
|
Exercised
|
|
|
(688,668
|
)
|
|
|
20.83
|
|
Forfeited
|
|
|
(122,470
|
)
|
|
|
28.34
|
|
Outstanding at December 31, 2018
|
|
|
1,746,468
|
|
|
|
25.93
|
|
Granted
|
|
|
184,434
|
|
|
|
53.92
|
|
Exercised
|
|
|
(346,098
|
)
|
|
|
21.98
|
|
Forfeited
|
|
|
(40,892
|
)
|
|
|
30.74
|
|
Outstanding at December 31, 2019
|
|
|
1,543,912
|
|
|
|
30.03
|
|
Of the total outstanding options at December 31, 2019, 1,160,714 were exercisable with a weighted average exercise price of $27.23 per share. The total outstanding options had a weighted average remaining contractual life of 3.6 years.
The table below presents the intrinsic value of options exercised and outstanding and factors related to our stock options (in thousands, except per share data):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Fair value of options vested
|
|
$
|
3,393
|
|
|
$
|
3,689
|
|
|
$
|
4,227
|
|
Intrinsic value of options exercised
|
|
|
11,103
|
|
|
|
14,852
|
|
|
|
2,752
|
|
Intrinsic value of options outstanding
|
|
|
39,194
|
|
|
|
26,654
|
|
|
|
7,312
|
|
Weighted-average fair value per share of options granted
|
|
|
16.86
|
|
|
|
9.74
|
|
|
|
9.43
|
|
The fair values of the options granted were estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Volatility
|
|
|
33
|
%
|
|
|
35
|
%
|
|
|
38
|
%
|
Dividend yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Life (in years)
|
|
|
4.43
|
|
|
|
4.44
|
|
|
|
4.51
|
|
Risk-free interest rate
|
|
|
2.41
|
%
|
|
|
2.54
|
%
|
|
|
1.85
|
%
|
70
The expected volatility of the options is based on the historical volatility of our common stock. We have not issued dividends on our common stock and do not expect to do so in the foreseeable future. The expected term of the options is based on the simplified method which does not consider historical employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date.
Performance Share Units and Restricted Stock Units and Awards
In February 2019 and 2018, our executive officers were granted PSU awards with vesting contingent on the Company’s total shareholder return as compared to indexed total shareholder return over the course of a three-year performance period (fiscal years 2018 – 2020 and fiscal years 2019 – 2021, respectively). The grant date fair value was estimated using a Monte Carlo simulation that utilizes multiple input variables that determine the probability of satisfying the performance conditions stipulated in the award and calculates the fair market value for the performance stock units granted. Expense is recognized on a straight-line basis over the performance period, regardless of whether the market condition is satisfied as the likelihood of the market condition being met is included in the fair-value measurement of the award.
In February 2017, our executive officers were granted PSU awards with vesting contingent on successful attainment of pre-determined revenue targets over the course of a three-year performance period (fiscal 2017 – 2019). The fair value is measured as the number of performance shares expected to be earned multiplied by the grant date fair value of our shares. The number of performance shares expected to vest during the current service period is estimated and the fair value of those shares is recognized over the remaining service period less any amounts already recognized.
RSUs vest over four years and, upon vesting, the holder is entitled to receive shares of our common stock. With RSAs, shares of our common stock are issued when the award is granted and the restrictions lapse over one year.
Our PSU and RSU activity was as follows:
|
|
|
|
|
|
Weighted Average
|
|
|
|
PSUs and RSUs
|
|
|
Grant Date Fair
|
|
|
|
(#)
|
|
|
Value ($/share)
|
|
Outstanding at December 31, 2016
|
|
|
378,084
|
|
|
|
27.07
|
|
Granted
|
|
|
422,336
|
|
|
|
27.81
|
|
Vested and common stock issued
|
|
|
(129,900
|
)
|
|
|
26.82
|
|
Forfeited
|
|
|
(26,696
|
)
|
|
|
27.70
|
|
Outstanding at December 31, 2017
|
|
|
643,824
|
|
|
|
27.58
|
|
Granted
|
|
|
345,590
|
|
|
|
33.02
|
|
Vested and common stock issued
|
|
|
(163,122
|
)
|
|
|
28.16
|
|
Forfeited
|
|
|
(71,622
|
)
|
|
|
27.52
|
|
Outstanding at December 31, 2018
|
|
|
754,670
|
|
|
|
29.95
|
|
Granted
|
|
|
278,622
|
|
|
|
55.83
|
|
Vested and common stock issued
|
|
|
(206,380
|
)
|
|
|
30.20
|
|
Forfeited
|
|
|
(31,826
|
)
|
|
|
34.67
|
|
Outstanding at December 31, 2019
|
|
|
795,086
|
|
|
|
38.76
|
|
71
The number of PSUs and RSUs outstanding at December 31, 2019 included 124,786 units that have vested, but the shares of common stock have not yet been issued, pursuant to the terms of the agreement.
Our RSA activity was as follows:
|
|
|
|
|
|
Weighted Average
|
|
|
|
RSAs
|
|
|
Grant Date Fair
|
|
|
|
(#)
|
|
|
Value ($/share)
|
|
Outstanding at December 31, 2016
|
|
|
3,048
|
|
|
|
26.14
|
|
Restricted common stock issued
|
|
|
10,908
|
|
|
|
29.15
|
|
Restrictions lapsed
|
|
|
(11,220
|
)
|
|
|
28.33
|
|
Outstanding at December 31, 2017
|
|
|
2,736
|
|
|
|
29.15
|
|
Restricted common stock issued
|
|
|
14,608
|
|
|
|
37.22
|
|
Restrictions lapsed
|
|
|
(13,680
|
)
|
|
|
35.60
|
|
Outstanding at December 31, 2018
|
|
|
3,664
|
|
|
|
37.22
|
|
Restricted common stock issued
|
|
|
9,840
|
|
|
|
51.80
|
|
Restrictions lapsed
|
|
|
(11,044
|
)
|
|
|
46.96
|
|
Outstanding at December 31, 2019
|
|
|
2,460
|
|
|
|
51.80
|
|
Employee Stock Purchase Plan
We have an employee stock purchase plan which allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The plan is available to all employees subject to certain eligibility requirements. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price that is the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period. The plan consists of two six-month offering periods, beginning on January 1 and July 1 of each calendar year. A total of 1.9 million shares of common stock are remaining for issuance under the plan at December 31, 2019.
Our ESPP activity was as follows (in thousands, except share data):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Withholdings for share purchases
|
|
$
|
2,270
|
|
|
$
|
1,745
|
|
|
$
|
1,933
|
|
Shares purchased
|
|
|
58,851
|
|
|
|
69,596
|
|
|
|
81,936
|
|
The fair value was estimated based on the market price of our common stock at the beginning of each offering period and using the Black-Scholes option pricing model with the following weighted-average assumptions:
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Volatility
|
|
|
36
|
%
|
|
|
26
|
%
|
|
|
32
|
%
|
Dividend yield
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Life (in years)
|
|
|
0.50
|
|
|
|
0.50
|
|
|
|
0.50
|
|
Risk-free interest rate
|
|
|
2.36
|
%
|
|
|
1.77
|
%
|
|
|
0.90
|
%
|
72
NOTE N – Income Taxes
Our provisions for income taxes included current federal, foreign and state income tax expense, as well as deferred tax expense as follows (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(184
|
)
|
State
|
|
|
599
|
|
|
|
1,103
|
|
|
|
258
|
|
Foreign
|
|
|
169
|
|
|
|
540
|
|
|
|
652
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
6,595
|
|
|
|
3,011
|
|
|
|
10,262
|
|
State
|
|
|
1,156
|
|
|
|
224
|
|
|
|
(291
|
)
|
Foreign
|
|
|
(161
|
)
|
|
|
(410
|
)
|
|
|
(355
|
)
|
|
|
$
|
8,358
|
|
|
$
|
4,468
|
|
|
$
|
10,342
|
|
The tax provision for the year ended December 31, 2017 included a $0.4 million reclass of alternative minimum tax (“AMT”) credit carryforwards from the deferred federal provision to current federal provision, of which $0.2 million was refunded in 2019. The remaining unutilized AMT credit carryforwards become partially refundable in 2020 and 2021, and fully refundable in 2022.
A reconciliation of the expected federal income tax at the statutory rate to the provision for income taxes was as follows (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Expected federal income tax at statutory rate
|
|
$
|
8,835
|
|
|
$
|
5,951
|
|
|
$
|
3,635
|
|
State income taxes, net of federal tax effect
|
|
|
1,933
|
|
|
|
1,293
|
|
|
|
417
|
|
Tax impact of foreign activity
|
|
|
(108
|
)
|
|
|
57
|
|
|
|
(105
|
)
|
Nondeductible executive compensation
|
|
|
940
|
|
|
|
902
|
|
|
|
530
|
|
Nondeductible expenses
|
|
|
329
|
|
|
|
351
|
|
|
|
268
|
|
Change in valuation allowance
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
16
|
|
Change in state deferred rate
|
|
|
47
|
|
|
|
38
|
|
|
|
(134
|
)
|
Research and development credit
|
|
|
(1,252
|
)
|
|
|
(1,843
|
)
|
|
|
(227
|
)
|
Tax impact of Tax Cuts and Jobs Act
|
|
|
—
|
|
|
|
—
|
|
|
|
6,796
|
|
Tax impact of stock activity
|
|
|
(2,518
|
)
|
|
|
(2,438
|
)
|
|
|
(925
|
)
|
Other
|
|
|
152
|
|
|
|
161
|
|
|
|
71
|
|
Total provision for income taxes
|
|
$
|
8,358
|
|
|
$
|
4,468
|
|
|
$
|
10,342
|
|
73
The Tax Act, which was enacted on December 22, 2017, reduced the corporate federal income tax rate to 21.0% effective January 1, 2018, resulting in discrete tax expense of $6.8 million for the reduction of deferred tax assets, for the year ended December 31, 2017. Also, the Tax Act expanded the deduction limits on executive compensation and included transition rules for previously awarded compensation.
Differences between our effective tax rate and statutory tax rates are primarily due to the federal research and development credit partially offset by permanently non-deductible expenses. Additionally, under ASU 2016-09, excess tax benefits generated upon settlement or exercise of stock awards are recognized as a reduction to income tax expense as a discrete tax item in the period that the event occurs creating potentially significant fluctuation in tax expense by year.
The significant components of our deferred tax assets (liabilities) were as follows (in thousands):
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss and credit carryforwards
|
|
$
|
9,122
|
|
|
|
|
|
|
$
|
8,356
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
3,944
|
|
|
|
|
|
|
|
3,647
|
|
|
|
|
|
Accounts receivable allowances
|
|
|
496
|
|
|
|
|
|
|
|
464
|
|
|
|
|
|
Accrued expenses
|
|
|
2,916
|
|
|
|
|
|
|
|
3,185
|
|
|
|
|
|
Other
|
|
|
9
|
|
|
|
|
|
|
|
180
|
|
|
|
|
|
Gross deferred tax assets
|
|
|
|
|
|
|
16,487
|
|
|
|
|
|
|
|
15,832
|
|
Less: valuation allowance
|
|
|
(1,068
|
)
|
|
|
|
|
|
|
(797
|
)
|
|
|
|
|
Total net deferred tax assets
|
|
|
|
|
|
|
15,419
|
|
|
|
|
|
|
|
15,035
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred operations
|
|
|
(8,820
|
)
|
|
|
|
|
|
|
(2,787
|
)
|
|
|
|
|
Foreign operations
|
|
|
(144
|
)
|
|
|
|
|
|
|
(135
|
)
|
|
|
|
|
Depreciation and amortization
|
|
|
(4,975
|
)
|
|
|
|
|
|
|
(2,943
|
)
|
|
|
|
|
Other
|
|
|
(43
|
)
|
|
|
|
|
|
|
(90
|
)
|
|
|
|
|
Total deferred tax liabilities
|
|
|
|
|
|
|
(13,982
|
)
|
|
|
|
|
|
|
(5,955
|
)
|
Net deferred tax assets
|
|
|
|
|
|
$
|
1,437
|
|
|
|
|
|
|
$
|
9,080
|
|
As of December 31, 2019, we had net operating loss carryforwards of $34.0 million for U.S. federal tax purposes. We also had $3.6 million of various state net operating loss carryforwards. The loss carryforwards for federal tax purposes will expire between 2020 and 2039 if not utilized. The loss carryforwards for state tax purposes will expire between 2021 and 2031 if not utilized.
Section 382 of the U.S. Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that might be used to offset taxable income when a corporation has undergone significant changes in stock ownership. As of December 31, 2019, we had $21.6 million of net operating loss carryforwards subject to Section 382 limitations, of which we believe approximately $17.6 million of federal losses will expire unused due to Section 382 limitations. The remaining $4.0 million is subject to a maximum annual limitation under Section 382 of approximately $1.0 million. This limitation could be further restricted if any ownership changes occur in future years. Accordingly, our deferred tax assets are reported net of the Section 382 limitations.
As of December 31, 2019, we had federal research and development credit carryforwards, net of Section 383 limitations, of $4.2 million, which, if not utilized, will begin to expire in 2030. We had state research and development credit carryforwards of $1.4 million which, if not utilized, will begin to expire in 2025.
As of December 31, 2019, we had a valuation allowance against our deferred tax assets of $1.1 million. The valuation allowance is established for state credit carryforwards that we do not expect to utilize based on our current expectations of future state taxable income.
We are subject to income taxes for U.S. federal and various state and international jurisdictions. We are generally subject to U.S. federal and state tax examinations for all prior tax years due to our net operating loss carryforwards and the utilization of the carryforwards in years still open under statute.
74
As of December 31, 2019, we do not have any unrecognized tax benefits. It is our practice to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not expect any material changes in our unrecognized tax positions over the next 12 months.
NOTE O – Net Income Per Share
The following table presents the components of the computation of basic and diluted net income per share for the periods indicated (in thousands, except per share amounts):
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
33,712
|
|
|
$
|
23,872
|
|
|
$
|
351
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic
|
|
|
35,024
|
|
|
|
34,392
|
|
|
|
34,366
|
|
Options to purchase common stock
|
|
|
680
|
|
|
|
612
|
|
|
|
300
|
|
PSUs, RSUs and RSAs
|
|
|
298
|
|
|
|
208
|
|
|
|
46
|
|
Weighted average common shares outstanding, diluted
|
|
|
36,002
|
|
|
|
35,212
|
|
|
|
34,712
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.96
|
|
|
$
|
0.69
|
|
|
$
|
0.01
|
|
Diluted
|
|
$
|
0.94
|
|
|
$
|
0.68
|
|
|
$
|
0.01
|
|
Shares and per share data have been adjusted for all periods presented to reflect a two-for-one stock split effective August 22, 2019.
For the years ended December 31, 2019, 2018 and 2017, the effect of approximately 181,000, approximately 1,000 and approximately 566,000 outstanding potential common shares, respectively, were excluded from the calculation of diluted net income per share as they were anti-dilutive.
NOTE P – Retirement Savings Plan
We sponsor a 401(k) retirement savings plan for our employees. Employees can contribute up to 80% of their compensation, subject to the limits established by law. In 2018, we increased our match to 50% of the employee’s contribution up to the first 6% of pre-tax annual compensation. A portion of our match is in company stock, which is purchased from the open market by our plan provider and immediately deposited into the employee’s 401(k) account. Additionally, we make statutory contributions to retirement plans as required by local foreign government regulations. Our total contributions to the plan were $3.3 million, $2.9 million and $1.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.
NOTE Q – Related Party Transactions
SPS Commerce Foundation (the “Foundation”) is a Minnesota non-profit organization exempt from federal taxation under Section 501(c)(3) of the Internal Revenue Code. The Foundation was formed in 2015 to engage in, advance, support, promote and administer charitable activities. The directors of the Foundation are also our officers. These officers receive no compensation from the Foundation for the management services performed for the Foundation. The Foundation is not a subsidiary of ours and the financial results of the Foundation are not consolidated with our financial statements. We made no contributions for the year ended December 31, 2019 and we made contributions of $0.7 million and $0.2 million to the Foundation for the years ended December 31, 2018 and 2017, respectively. We have no current legal obligations for future commitments to the Foundation.
75
NOTE R – Selected Quarterly Financial Data (Unaudited)
The following table presents our selected unaudited quarterly statements of comprehensive income data (in thousands, except per share amounts):
|
|
For the Three Months Ended
|
|
2019
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Jun 30
|
|
|
Mar 31
|
|
Revenues
|
|
$
|
72,733
|
|
|
$
|
70,928
|
|
|
$
|
68,529
|
|
|
$
|
66,934
|
|
Gross profit
|
|
|
48,824
|
|
|
|
47,665
|
|
|
|
44,829
|
|
|
|
45,567
|
|
Income from operations
|
|
|
10,764
|
|
|
|
10,933
|
|
|
|
9,330
|
|
|
|
7,379
|
|
Net income
|
|
|
9,162
|
|
|
|
8,941
|
|
|
|
8,796
|
|
|
|
6,813
|
|
Diluted earnings per share
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.19
|
|
|
|
For the Three Months Ended
|
|
2018
|
|
Dec 31
|
|
|
Sep 30
|
|
|
Jun 30
|
|
|
Mar 31
|
|
Revenues
|
|
$
|
65,189
|
|
|
$
|
62,868
|
|
|
$
|
61,091
|
|
|
$
|
59,092
|
|
Gross profit
|
|
|
44,012
|
|
|
|
42,457
|
|
|
|
40,689
|
|
|
|
39,334
|
|
Income from operations
|
|
|
8,209
|
|
|
|
8,257
|
|
|
|
5,965
|
|
|
|
4,300
|
|
Net income
|
|
|
7,141
|
|
|
|
8,061
|
|
|
|
5,416
|
|
|
|
3,254
|
|
Diluted earnings per share
|
|
$
|
0.21
|
|
|
$
|
0.23
|
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
76