SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud
services, today announced financial results for the second quarter
ended June 30, 2020.
Revenue was $75.6 million in the second quarter of 2020,
compared to $68.5 million in the second quarter of 2019, reflecting
10% growth in revenue from the second quarter of 2019. Recurring
revenue grew 11% from the second quarter of 2019.
Net income in the second quarter of 2020 was $11.2 million or
$0.31 per diluted share, compared to net income of $8.8 million or
$0.24 per diluted share, in the second quarter of 2019. Non-GAAP
income per diluted share was $0.37 compared to non-GAAP income per
diluted share of $0.30 in the second quarter of 2019.
Adjusted EBITDA for the second quarter of 2020 increased 25% to
$20.4 million compared to the second quarter of 2019.
“The dynamics impacting the retail industry continued into the
second quarter with both retailers and suppliers seeing the need
for increased efficiency and automation across the supply chain,
underscoring the critical nature of the service we provide,” said
Archie Black, President and CEO of SPS Commerce. “The
challenges we have endured this year have impacted our communities,
our businesses and our lives. We would like to thank SPS
Commerce employees for their ongoing dedication to our customers
and our communities. We remain committed to take action and make
progress in the years ahead.”
“We cannot predict the duration and magnitude of the pandemic
and its growing impact on the economy, but the challenges the
retail industry faces underscore the need for EDI and supply chain
automation. With our cloud-native operational model, SPS
Commerce is well positioned to continue to provide mission critical
solutions and support our customers, partners and our community,”
said Kim Nelson, CFO of SPS Commerce.
Guidance
For the third quarter of 2020, revenue is expected to be in the
range of $76.6 million to $77.1 million. Third quarter net
income per diluted share is expected to be in the range of $0.19 to
$0.20 with fully diluted weighted average shares outstanding of
approximately 36.3 million shares. Non-GAAP income per
diluted share is expected to be in the range of $0.32 to
$0.33. Adjusted EBITDA is expected to be in the range of
$20.5 million to $21.0 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.
The dynamics of the current situation continue to impact our
business and we continue to monitor the uncertainty around the
duration and magnitude of the pandemic, and the impact that a
second wave of infections may have on economic activity. We
are also taking into account the possibility of continued pressure
on retailers, prolonged store closures and potential bankruptcies,
all of which would negatively impact our business. However,
with two quarters left in the year, and the ongoing need for
automation across our network which continues to drive momentum for
our Fulfillment product, we are reinstating 2020 annual
guidance.
For the full year of 2020, revenue is expected to be in the
range of $304.1 million to $305.3 million, representing
approximately 9% growth over 2019. Full year net income per diluted
share is expected to be in the range of $0.99 to $1.00 with fully
diluted weighted average shares outstanding of approximately 36.1
million shares. Non-GAAP income per diluted share is
expected to be in the range of $1.41 to $1.42. Adjusted EBITDA is
expected to be in the range of $82.4 to $83.5 million, representing
approximately 18% to 20% growth over 2019. Non-cash, share-based
compensation expense is expected to be approximately $19.6 million,
depreciation expense is expected to be approximately $13.4 million
and amortization expense is expected to be approximately $5.5
million.
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 # 3793818 at least 15 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 78 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 MeasuresTo 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, investment income (interest income/expense,
realized investments gain/loss excluding realized gain/loss from
foreign currency on investments), income tax expense, stock-based
compensation expense, realized gain/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 StatementsThis 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 third 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 Relations The Blueshirt Group Irmina Blaszczyk
Lisa Laukkanen SPSC@blueshirtgroup.com 415-217-4962
SPS COMMERCE, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(Unaudited; in thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
2020 |
|
|
2019 |
|
ASSETS |
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
174,850 |
|
|
$ |
179,252 |
|
Short-term investments |
|
50,775 |
|
|
|
34,284 |
|
Accounts receivable |
|
37,840 |
|
|
|
33,001 |
|
Allowance for credit losses |
|
(3,663 |
) |
|
|
(1,469 |
) |
Accounts receivable, net |
|
34,177 |
|
|
|
31,532 |
|
Deferred costs |
|
35,797 |
|
|
|
35,274 |
|
Other assets |
|
8,378 |
|
|
|
11,279 |
|
Total current assets |
|
303,977 |
|
|
|
291,621 |
|
PROPERTY AND EQUIPMENT, less
accumulated depreciation of $55,377 and $50,574, respectively |
|
25,510 |
|
|
|
23,752 |
|
OPERATING LEASE RIGHT-OF-USE
ASSETS |
|
14,839 |
|
|
|
15,744 |
|
GOODWILL |
|
75,883 |
|
|
|
76,845 |
|
INTANGIBLE ASSETS, net |
|
19,790 |
|
|
|
22,668 |
|
INVESTMENTS |
|
7,566 |
|
|
|
— |
|
OTHER ASSETS |
|
|
|
|
|
|
|
Deferred costs, non-current |
|
10,852 |
|
|
|
11,667 |
|
Deferred income tax assets |
|
1,030 |
|
|
|
2,630 |
|
Other assets, non-current |
|
2,216 |
|
|
|
2,513 |
|
Total assets |
$ |
461,663 |
|
|
$ |
447,440 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Accounts payable |
$ |
4,256 |
|
|
$ |
4,274 |
|
Accrued compensation |
|
16,950 |
|
|
|
22,303 |
|
Accrued expenses |
|
5,067 |
|
|
|
6,207 |
|
Deferred revenue |
|
36,273 |
|
|
|
31,463 |
|
Operating lease liabilities |
|
4,189 |
|
|
|
3,783 |
|
Total current liabilities |
|
66,735 |
|
|
|
68,030 |
|
OTHER LIABILITIES |
|
|
|
|
|
|
|
Deferred revenue, non-current |
|
2,746 |
|
|
|
2,851 |
|
Operating lease liabilities, non-current |
|
17,920 |
|
|
|
20,085 |
|
Deferred income tax liabilities |
|
952 |
|
|
|
1,193 |
|
Other liabilities, non-current |
|
— |
|
|
|
405 |
|
Total liabilities |
|
88,353 |
|
|
|
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;
36,739,368 and 36,104,619 shares issued; and 35,126,118 and
34,863,271 outstanding, respectively |
|
37 |
|
|
|
36 |
|
Treasury stock, at cost; 1,613,250 and 1,241,348 shares,
respectively |
|
(65,247 |
) |
|
|
(46,297 |
) |
Additional paid-in capital |
|
373,686 |
|
|
|
354,115 |
|
Retained earnings |
|
68,613 |
|
|
|
48,973 |
|
Accumulated other comprehensive loss |
|
(3,779 |
) |
|
|
(1,951 |
) |
Total stockholders’ equity |
|
373,310 |
|
|
|
354,876 |
|
Total liabilities and stockholders’ equity |
$ |
461,663 |
|
|
$ |
447,440 |
|
|
|
|
|
|
|
|
|
SPS COMMERCE, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
(Unaudited, in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
June 30, |
|
|
June 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenues |
$ |
75,573 |
|
|
$ |
68,529 |
|
|
$ |
149,765 |
|
|
$ |
135,463 |
|
Cost of revenues |
|
24,326 |
|
|
|
23,700 |
|
|
|
47,870 |
|
|
|
45,067 |
|
Gross profit |
|
51,247 |
|
|
|
44,829 |
|
|
|
101,895 |
|
|
|
90,396 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
18,611 |
|
|
|
17,545 |
|
|
|
36,910 |
|
|
|
35,467 |
|
Research and development |
|
7,466 |
|
|
|
6,509 |
|
|
|
15,034 |
|
|
|
12,701 |
|
General and administrative |
|
12,743 |
|
|
|
10,179 |
|
|
|
24,652 |
|
|
|
22,949 |
|
Amortization of intangible assets |
|
1,316 |
|
|
|
1,266 |
|
|
|
2,652 |
|
|
|
2,570 |
|
Total operating expenses |
|
40,136 |
|
|
|
35,499 |
|
|
|
79,248 |
|
|
|
73,687 |
|
Income from operations |
|
11,111 |
|
|
|
9,330 |
|
|
|
22,647 |
|
|
|
16,709 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
226 |
|
|
|
813 |
|
|
|
866 |
|
|
|
1,390 |
|
Other income, net |
|
1,242 |
|
|
|
240 |
|
|
|
1 |
|
|
|
193 |
|
Change in earn-out liability |
|
— |
|
|
|
400 |
|
|
|
(72 |
) |
|
|
344 |
|
Total other income, net |
|
1,468 |
|
|
|
1,453 |
|
|
|
795 |
|
|
|
1,927 |
|
Income before income taxes |
|
12,579 |
|
|
|
10,783 |
|
|
|
23,442 |
|
|
|
18,636 |
|
Income tax expense |
|
1,385 |
|
|
|
1,987 |
|
|
|
2,733 |
|
|
|
3,027 |
|
Net income |
$ |
11,194 |
|
|
$ |
8,796 |
|
|
$ |
20,709 |
|
|
$ |
15,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.32 |
|
|
$ |
0.25 |
|
|
$ |
0.59 |
|
|
$ |
0.45 |
|
Diluted |
$ |
0.31 |
|
|
$ |
0.24 |
|
|
$ |
0.58 |
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
used to compute net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
35,030 |
|
|
|
35,010 |
|
|
|
35,051 |
|
|
|
34,976 |
|
Diluted |
|
36,016 |
|
|
|
36,020 |
|
|
|
35,995 |
|
|
|
36,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2020 |
|
|
2019 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
|
Net income |
$ |
20,709 |
|
|
$ |
15,609 |
|
Reconciliation of net income to net cash provided by operating
activities |
|
|
|
|
|
|
|
Deferred income taxes |
|
1,443 |
|
|
|
2,634 |
|
Change in earn-out liability |
|
72 |
|
|
|
(344 |
) |
Depreciation and amortization of property and equipment |
|
6,276 |
|
|
|
5,324 |
|
Amortization of intangible assets |
|
2,652 |
|
|
|
2,570 |
|
Provision for credit losses |
|
3,020 |
|
|
|
1,504 |
|
Stock-based compensation |
|
9,353 |
|
|
|
8,169 |
|
Other, net |
|
(129 |
) |
|
|
(357 |
) |
Changes in assets and liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
(7,071 |
) |
|
|
(4,769 |
) |
Deferred costs |
|
275 |
|
|
|
(56 |
) |
Other current and non-current assets |
|
3,141 |
|
|
|
(549 |
) |
Accounts payable |
|
321 |
|
|
|
(490 |
) |
Accrued compensation |
|
(6,166 |
) |
|
|
(5,210 |
) |
Accrued expenses |
|
(964 |
) |
|
|
404 |
|
Deferred revenue |
|
4,705 |
|
|
|
5,250 |
|
Operating leases |
|
(842 |
) |
|
|
(27 |
) |
Net cash provided by operating activities |
|
36,795 |
|
|
|
29,662 |
|
Cash flows from investing
activities |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(8,396 |
) |
|
|
(5,351 |
) |
Purchases of investments |
|
(55,144 |
) |
|
|
(44,548 |
) |
Maturities of investments |
|
31,050 |
|
|
|
37,725 |
|
Net cash used in investing activities |
|
(32,490 |
) |
|
|
(12,174 |
) |
Cash flows from financing
activities |
|
|
|
|
|
|
|
Repurchases of common stock |
|
(18,950 |
) |
|
|
(8,966 |
) |
Net proceeds from exercise of options to purchase common stock |
|
9,426 |
|
|
|
3,371 |
|
Net proceeds from employee stock purchase plan |
|
1,550 |
|
|
|
1,079 |
|
Payment for earn-out liability |
|
(688 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(8,662 |
) |
|
|
(4,516 |
) |
Effect of foreign currency
exchange rate changes |
|
(45 |
) |
|
|
192 |
|
Net increase in cash and cash
equivalents |
|
(4,402 |
) |
|
|
13,164 |
|
Cash and cash equivalents at
beginning of period |
|
179,252 |
|
|
|
133,859 |
|
Cash and cash equivalents at
end of period |
$ |
174,850 |
|
|
$ |
147,023 |
|
|
|
|
|
|
|
|
|
SPS COMMERCE, INC. |
|
NON-GAAP RECONCILIATION |
|
(Unaudited; in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
June 30, |
|
|
June 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net income |
$ |
11,194 |
|
|
$ |
8,796 |
|
|
$ |
20,709 |
|
|
$ |
15,609 |
|
Depreciation and amortization of property and equipment |
|
3,138 |
|
|
|
2,688 |
|
|
|
6,276 |
|
|
|
5,324 |
|
Amortization of intangible assets |
|
1,316 |
|
|
|
1,266 |
|
|
|
2,652 |
|
|
|
2,570 |
|
Investment income, net |
|
(332 |
) |
|
|
(813 |
) |
|
|
(972 |
) |
|
|
(1,390 |
) |
Income tax expense |
|
1,385 |
|
|
|
1,987 |
|
|
|
2,733 |
|
|
|
3,027 |
|
Stock-based compensation expense |
|
5,009 |
|
|
|
2,875 |
|
|
|
9,353 |
|
|
|
8,169 |
|
Realized gain from foreign currency on cash and investments
held |
|
(1,370 |
) |
|
|
- |
|
|
|
(127 |
) |
|
|
- |
|
Other |
|
82 |
|
|
|
(400 |
) |
|
|
154 |
|
|
|
(461 |
) |
Adjusted EBITDA |
$ |
20,422 |
|
|
$ |
16,399 |
|
|
$ |
40,778 |
|
|
$ |
32,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
11,194 |
|
|
$ |
8,796 |
|
|
$ |
20,709 |
|
|
$ |
15,609 |
|
Stock-based compensation expense |
|
5,009 |
|
|
|
2,875 |
|
|
|
9,353 |
|
|
|
8,169 |
|
Amortization of intangible assets |
|
1,316 |
|
|
|
1,266 |
|
|
|
2,652 |
|
|
|
2,570 |
|
Realized gain from foreign currency on cash and investments
held |
|
(1,370 |
) |
|
|
- |
|
|
|
(127 |
) |
|
|
- |
|
Other |
|
82 |
|
|
|
(400 |
) |
|
|
154 |
|
|
|
(461 |
) |
Income tax effects of adjustments |
|
(2,886 |
) |
|
|
(1,723 |
) |
|
|
(5,912 |
) |
|
|
(4,366 |
) |
Non-GAAP income |
$ |
13,345 |
|
|
$ |
10,814 |
|
|
$ |
26,829 |
|
|
$ |
21,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute non-GAAP
income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
35,030 |
|
|
|
35,010 |
|
|
|
35,051 |
|
|
|
34,976 |
|
Diluted |
|
36,016 |
|
|
|
36,020 |
|
|
|
35,995 |
|
|
|
36,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.38 |
|
|
$ |
0.31 |
|
|
$ |
0.77 |
|
|
$ |
0.62 |
|
Diluted |
$ |
0.37 |
|
|
$ |
0.30 |
|
|
$ |
0.75 |
|
|
$ |
0.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares and per share data have been adjusted for all periods
presented to reflect a two-for-one stock split effective August 22,
2019.
Contact:Investor RelationsThe Blueshirt GroupIrmina
BlaszczykLisa LaukkanenSPSC@blueshirtgroup.com415-217-4962
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