SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud
services, today announced financial results for the first quarter
ended March 31, 2020.
Revenue was $74.2 million in the first quarter of 2020, compared
to $66.9 million in the first quarter of 2019, reflecting 11%
growth in revenue from the first quarter of 2019. Recurring revenue
grew 12% from the first quarter of 2019.
Net income in the first quarter of 2020 was $9.5 million or
$0.26 per diluted share, compared to net income of $6.8 million or
$0.19 per diluted share, in the first quarter of 2019. Non-GAAP
income per diluted share was $0.38 compared to non-GAAP income per
diluted share of $0.30 in the first quarter of 2019.
Adjusted EBITDA for the first quarter of 2020 increased 24% to
$20.4 million compared to the first quarter of 2019.
“SPS Commerce plays a mission-critical role in the global supply
chain. Our solutions are keeping trading partners connected,
especially now during this time of crisis and disruption,” said
Archie Black, President and CEO of SPS Commerce. “We’d like to
thank our employees and our partners who delivered world class
service as they responded to the needs of retailers impacted by
macroeconomic effects of the pandemic, executing remote retail
automation better and faster than ever. We remain fully
committed to provide unwavering support to the suppliers and
retailers that serve our communities in these challenging
times.”
“We are pleased with our first quarter results as we continued
to deliver uninterrupted, full-service solutions remotely, to new
and existing customers worldwide. With proven operational
leverage and a strong balance sheet, we are confident that SPS
Commerce is positioned to overcome near term uncertainties. We
expect the current supply chain dynamics to amplify the need for
e-commerce and EDI solutions in the long term, and we believe SPS
Commerce is uniquely positioned to expand on its market
leadership.” said Kim Nelson, CFO of SPS Commerce.
Guidance
For the second quarter of 2020, revenue is expected to be in the
range of $73.8 million to $74.8 million. Second quarter net
income per diluted share is expected to be in the range of $0.17 to
$0.19 with fully diluted weighted average shares outstanding of
approximately 36.2 million shares. Non-GAAP income per
diluted share is expected to be in the range of $0.29 to
$0.31. Adjusted EBITDA is expected to be in the range of
$19.0 million to $20.0 million. Non-cash, share-based
compensation expense is expected to be approximately $5.1 million,
depreciation expense is expected to be approximately $3.5 million
and amortization expense is expected to be approximately $1.4
million.
Due to uncertainties related to the macroeconomic impact of the
COVID-19 pandemic, we are withdrawing 2020 guidance until we can
ascertain the scale of the impact on retail dynamics, and our
business. However, given our history of strong operating
leverage and the resilience of our SaaS business model, we remain
confident in our ability to expand adjusted EBITDA margin in
2020.
For modeling purposes, we expect stock based compensation
expense for the year of approximately $19.7 million, depreciation
expense of approximately $13.8 million, and amortization expense of
approximately $5.6 million.
We will continue to monitor the macroeconomic impact on retail
dynamics and reassess our visibility for the full year at the end
of the second quarter.
Quarterly Conference Call
SPS Commerce will discuss its quarterly results today via
teleconference at 3:30 p.m. CT (4:30 p.m. ET). To access the call,
please dial (877) 312-7508, or outside the U.S. (253) 237-1184,
with Conference ID #5367429 at least five minutes prior to the 3:30
p.m. CT start time. A live webcast of the call will also be
available at http://investors.spscommerce.com under the Events and
Presentations menu. The replay will also be available on our
website at http://investors.spscommerce.com.
About SPS Commerce
SPS Commerce is the world’s leading retail network, connecting
trading partners around the globe to optimize supply chain
operations for all retail partners. We support data-driven
partnerships with innovative cloud technology, customer-obsessed
service and accessible experts so our customers can focus on what
they do best. To date, more than 90,000 companies in retail,
distribution, grocery and e-commerce have chosen SPS as their
retail network. SPS has achieved 77 consecutive quarters of revenue
growth and is headquartered in Minneapolis. For additional
information, contact SPS at 866-245-8100 or visit
www.spscommerce.com.
SPS COMMERCE, SPS, SPS logo, RETAIL UNIVERSE, 1=INFINITY logo,
AS THE NETWORK GROWS, SO DOES YOUR OPPORTUNITY, INFINITE RETAIL
POWER, RETAIL UNIVERSE are marks of SPS Commerce, Inc. and
Registered in the U.S. Patent and Trademark Office. RSX,
IN:FLUENCE, and others are further marks of SPS Commerce, Inc.
These marks may be registered or otherwise protected in other
countries.
SPS-F
Use of Non-GAAP Financial Measures
To supplement its financial statements, SPS Commerce also
provides investors with Adjusted EBITDA and non-GAAP net income per
share, which are non-GAAP financial measures. SPS Commerce believes
that these non-GAAP measures provide useful information to
management and investors regarding certain financial and business
trends relating to its financial condition and results of
operations. SPS Commerce's management uses these non-GAAP measures
to compare the company's performance to that of prior periods for
trend analyses and planning purposes. It uses Adjusted EBITDA for
purposes of determining executive and senior management incentive
compensation. These measures are also presented to the company's
board of directors.
Adjusted EBITDA consists of net income adjusted for depreciation
and amortization, interest expense, interest income, income tax
expense, stock-based compensation expense, realized loss from
foreign currency on cash and investments held, and other
adjustments as necessary for a fair presentation. SPS Commerce uses
Adjusted EBITDA as a measure of operating performance because it
assists the company in comparing performance on a consistent basis,
as it removes from operating results the impact of the company's
capital structure. SPS Commerce believes Adjusted EBITDA is useful
to an investor in evaluating the company's operating performance
because it is widely used to measure a company's operating
performance without regard to items such as depreciation and
amortization, which can vary depending upon accounting methods and
the book value of assets, and to present a meaningful measure of
corporate performance exclusive of the company's capital structure
and the method by which assets were acquired.
Non-GAAP income per share consists of net income plus
stock-based compensation expense, amortization expense related to
intangible assets, realized loss from foreign currency on cash and
investments held, and other adjustments as necessary for a fair
presentation, divided by the weighted average number of shares of
common stock outstanding during each period. SPS Commerce
includes an adjustment to non-GAAP income to reflect the income tax
effects of the adjustments to GAAP net income. To quantify
these tax effects, SPS Commerce recalculates income tax expense
excluding the direct book and tax effects of the specific items
constituting the non-GAAP adjustments (e.g., stock-based
compensation expense). The difference between this recalculated
income tax expense and GAAP income tax expense is presented as the
income tax effect of the non-GAAP adjustments.
SPS Commerce believes non-GAAP income per share is useful to an
investor because it is widely used to measure a company's operating
performance. These non-GAAP measures should not be considered
a substitute for, or superior to, financial measures calculated in
accordance with generally accepted accounting principles in the
United States. These non-GAAP financial measures exclude
significant expenses and income that are required by GAAP to be
recorded in the company's financial statements and are subject to
inherent limitations. SPS Commerce urges investors to review the
reconciliation of its non-GAAP financial measures to the comparable
GAAP financial measures that are included in this press
release.
Forward-Looking Statements
This press release contains forward-looking statements,
including information about management's view of SPS Commerce's
future expectations, plans and prospects, including our views
regarding future execution within our business, the opportunity we
see in the retail supply chain world, our positioning for the
future, our performance for the second quarter and full year of
2020, and any statements about the future effect of the COVID-19
pandemic on our business, customers or the global economy and our
business prospects, all of which fall within the safe harbor
provisions under The Private Securities Litigation Reform Act of
1995. These statements involve known and unknown risks,
uncertainties and other factors which may cause the results of SPS
Commerce to be materially different than those expressed or implied
in such statements. Certain of these risk factors and others are
included in documents SPS Commerce files with the Securities and
Exchange Commission, including but not limited to, SPS Commerce's
Annual Report on Form 10-K for the year ended December 31, 2019, as
well as subsequent reports filed with the Securities and Exchange
Commission. Other unknown or unpredictable factors also could have
material adverse effects on SPS Commerce's future results. The
forward-looking statements included in this press release are made
only as of the date hereof. SPS Commerce cannot guarantee future
results, levels of activity, performance or achievements.
Accordingly, you should not place undue reliance on these
forward-looking statements. Finally, SPS Commerce expressly
disclaims any intent or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Contact:Investor RelationsThe Blueshirt GroupIrmina
BlaszczykLisa
LaukkanenSPSC@blueshirtgroup.com415-217-4962
SPS
COMMERCE, INC. |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
(Unaudited; in
thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
ASSETS |
|
|
|
|
|
|
|
CURRENT
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
184,484 |
|
|
$ |
179,252 |
|
Short-term investments |
|
|
30,074 |
|
|
|
34,284 |
|
Accounts receivable |
|
|
33,275 |
|
|
|
33,001 |
|
Allowance for credit losses |
|
|
(2,939 |
) |
|
|
(1,469 |
) |
Accounts receivable, net |
|
|
30,336 |
|
|
|
31,532 |
|
Deferred costs |
|
|
35,543 |
|
|
|
35,274 |
|
Other assets |
|
|
9,417 |
|
|
|
11,279 |
|
Total current assets |
|
|
289,854 |
|
|
|
291,621 |
|
PROPERTY AND
EQUIPMENT, less accumulated depreciation of $53,458 and $50,574,
respectively |
|
|
24,035 |
|
|
|
23,752 |
|
OPERATING
LEASE RIGHT-OF-USE ASSET |
|
|
15,170 |
|
|
|
15,744 |
|
GOODWILL |
|
|
74,463 |
|
|
|
76,845 |
|
INTANGIBLE
ASSETS, net |
|
|
20,857 |
|
|
|
22,668 |
|
OTHER
ASSETS |
|
|
|
|
|
|
|
|
Deferred costs, non-current |
|
|
11,393 |
|
|
|
11,667 |
|
Deferred income tax assets |
|
|
1,837 |
|
|
|
2,630 |
|
Other assets, non-current |
|
|
2,210 |
|
|
|
2,513 |
|
Total assets |
|
$ |
439,819 |
|
|
$ |
447,440 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
4,602 |
|
|
$ |
4,274 |
|
Accrued compensation |
|
|
13,132 |
|
|
|
22,303 |
|
Accrued expenses |
|
|
5,374 |
|
|
|
6,207 |
|
Deferred revenue |
|
|
34,929 |
|
|
|
31,463 |
|
Operating lease liabilities |
|
|
3,866 |
|
|
|
3,783 |
|
Total current liabilities |
|
|
61,903 |
|
|
|
68,030 |
|
OTHER
LIABILITIES |
|
|
|
|
|
|
|
|
Deferred revenue, non-current |
|
|
2,781 |
|
|
|
2,851 |
|
Operating lease liabilities, non-current |
|
|
18,957 |
|
|
|
20,085 |
|
Deferred income tax liabilities |
|
|
990 |
|
|
|
1,193 |
|
Other liabilities, non-current |
|
|
— |
|
|
|
405 |
|
Total liabilities |
|
|
84,631 |
|
|
|
92,564 |
|
COMMITMENTS
and CONTINGENCIES |
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0
shares issued and outstanding |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 55,000,000 shares authorized;
36,474,448 and 36,104,619 shares issued; and 34,992,825 and
34,863,271 outstanding, respectively |
|
|
36 |
|
|
|
36 |
|
Treasury stock, at cost; 1,481,623 and 1,241,348 shares,
respectively |
|
|
(58,297 |
) |
|
|
(46,297 |
) |
Additional paid-in capital |
|
|
361,853 |
|
|
|
354,115 |
|
Retained earnings |
|
|
57,419 |
|
|
|
48,973 |
|
Accumulated other comprehensive loss |
|
|
(5,823 |
) |
|
|
(1,951 |
) |
Total stockholders’ equity |
|
|
355,188 |
|
|
|
354,876 |
|
Total liabilities and stockholders’ equity |
|
$ |
439,819 |
|
|
$ |
447,440 |
|
|
|
|
|
|
|
|
|
|
SPS
COMMERCE, INC. |
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
|
(Unaudited; in
thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
March 31, |
|
|
|
2020 |
|
|
2019 |
|
Revenues |
|
$ |
74,192 |
|
|
$ |
66,934 |
|
Cost of
revenues |
|
|
23,544 |
|
|
|
21,367 |
|
Gross profit |
|
|
50,648 |
|
|
|
45,567 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
18,299 |
|
|
|
17,922 |
|
Research and development |
|
|
7,568 |
|
|
|
6,192 |
|
General and administrative |
|
|
11,909 |
|
|
|
12,770 |
|
Amortization of intangible assets |
|
|
1,336 |
|
|
|
1,304 |
|
Total operating expenses |
|
|
39,112 |
|
|
|
38,188 |
|
Income from
operations |
|
|
11,536 |
|
|
|
7,379 |
|
Other income
(expense) |
|
|
|
|
|
|
|
|
Interest income, net |
|
|
640 |
|
|
|
577 |
|
Other expense, net |
|
|
(1,241 |
) |
|
|
(47 |
) |
Change in earn-out liability |
|
|
(72 |
) |
|
|
(56 |
) |
Total other income (expense), net |
|
|
(673 |
) |
|
|
474 |
|
Income
before income taxes |
|
|
10,863 |
|
|
|
7,853 |
|
Income tax expense |
|
|
1,348 |
|
|
|
1,040 |
|
Net
income |
|
$ |
9,515 |
|
|
$ |
6,813 |
|
|
|
|
|
|
|
|
|
|
Net income
per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.27 |
|
|
$ |
0.19 |
|
Diluted |
|
$ |
0.26 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares used to compute net income per share |
|
|
|
|
|
|
|
|
Basic |
|
|
35,072 |
|
|
|
34,942 |
|
Diluted |
|
|
35,926 |
|
|
|
35,984 |
|
Shares and per share data have been adjusted for all periods
presented to reflect a two-for-one stock split effective August 22,
2019.
SPS
COMMERCE, INC. |
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(Unaudited; in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
March 31, |
|
|
|
2020 |
|
|
2019 |
|
Cash flows
from operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,515 |
|
|
$ |
6,813 |
|
Reconciliation of net income to net cash provided by operating
activities |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
668 |
|
|
|
838 |
|
Change in earn-out liability |
|
|
72 |
|
|
|
56 |
|
Depreciation and amortization of property and equipment |
|
|
3,138 |
|
|
|
2,637 |
|
Amortization of intangible assets |
|
|
1,336 |
|
|
|
1,304 |
|
Provision for credit losses |
|
|
1,285 |
|
|
|
655 |
|
Stock-based compensation |
|
|
4,344 |
|
|
|
5,294 |
|
Other, net |
|
|
(105 |
) |
|
|
(240 |
) |
Changes in assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(1,053 |
) |
|
|
(1,328 |
) |
Deferred costs |
|
|
(256 |
) |
|
|
(414 |
) |
Other current and non-current assets |
|
|
2,041 |
|
|
|
(337 |
) |
Accounts payable |
|
|
655 |
|
|
|
353 |
|
Accrued compensation |
|
|
(9,302 |
) |
|
|
(8,843 |
) |
Accrued expenses |
|
|
(615 |
) |
|
|
60 |
|
Deferred revenue |
|
|
3,396 |
|
|
|
3,698 |
|
Operating leases |
|
|
(452 |
) |
|
|
(345 |
) |
Net cash provided by operating activities |
|
|
14,667 |
|
|
|
10,201 |
|
Cash flows
from investing activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(3,965 |
) |
|
|
(2,899 |
) |
Purchases of investments |
|
|
(12,460 |
) |
|
|
(12,447 |
) |
Maturities of investments |
|
|
15,875 |
|
|
|
15,225 |
|
Net cash used in investing activities |
|
|
(550 |
) |
|
|
(121 |
) |
Cash flows
from financing activities |
|
|
|
|
|
|
|
|
Repurchases of common stock |
|
|
(12,000 |
) |
|
|
(2,966 |
) |
Net proceeds from exercise of options to purchase common stock |
|
|
3,683 |
|
|
|
2,472 |
|
Net proceeds from employee stock purchase plan |
|
|
87 |
|
|
|
— |
|
Payment for earn-out liability |
|
|
(688 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(8,918 |
) |
|
|
(494 |
) |
Effect of
foreign currency exchange rate changes |
|
|
33 |
|
|
|
270 |
|
Net increase
in cash and cash equivalents |
|
|
5,232 |
|
|
|
9,856 |
|
Cash and
cash equivalents at beginning of period |
|
|
179,252 |
|
|
|
133,859 |
|
Cash and
cash equivalents at end of period |
|
$ |
184,484 |
|
|
$ |
143,715 |
|
|
|
|
|
|
|
|
|
|
SPS
COMMERCE, INC. |
|
NON-GAAP
RECONCILIATION |
|
(Unaudited; in
thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
March 31, |
|
|
|
2020 |
|
|
2019 |
|
Net
income |
|
$ |
9,515 |
|
|
$ |
6,813 |
|
Depreciation and amortization of property |
|
|
|
|
|
|
|
|
and equipment |
|
|
3,138 |
|
|
|
2,637 |
|
Amortization of intangible assets |
|
|
1,336 |
|
|
|
1,304 |
|
Interest income, net |
|
|
(640 |
) |
|
|
(577 |
) |
Income tax expense |
|
|
1,348 |
|
|
|
1,040 |
|
Stock-based compensation expense |
|
|
4,344 |
|
|
|
5,294 |
|
Realized loss from foreign currency on cash and investments
held |
|
|
1,243 |
|
|
|
- |
|
Other |
|
|
72 |
|
|
|
(61 |
) |
Adjusted
EBITDA |
|
$ |
20,356 |
|
|
$ |
16,450 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
9,515 |
|
|
$ |
6,813 |
|
Stock-based compensation expense |
|
|
4,344 |
|
|
|
5,294 |
|
Amortization of intangible assets |
|
|
1,336 |
|
|
|
1,304 |
|
Realized loss from foreign currency on cash and investments
held |
|
|
1,243 |
|
|
|
- |
|
Other |
|
|
72 |
|
|
|
(61 |
) |
Income tax effects of adjustments |
|
|
(3,026 |
) |
|
|
(2,643 |
) |
Non-GAAP
income |
|
$ |
13,484 |
|
|
$ |
10,707 |
|
|
|
|
|
|
|
|
|
|
Shares used
to compute non-GAAP income per share |
|
|
|
|
|
|
|
|
Basic |
|
|
35,072 |
|
|
|
34,942 |
|
Diluted |
|
|
35,926 |
|
|
|
35,984 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
income per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.38 |
|
|
$ |
0.31 |
|
Diluted |
|
$ |
0.38 |
|
|
$ |
0.30 |
|
Shares and per share data have been adjusted for all periods
presented to reflect a two-for-one stock split effective August 22,
2019.
SPS Commerce (NASDAQ:SPSC)
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SPS Commerce (NASDAQ:SPSC)
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