SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud
services, today announced financial results for the first quarter
ended March 31, 2023.
First Quarter 2023 Financial Highlights
- Revenue was $125.9 million in the first quarter of 2023,
compared to $105.2 million in the first quarter of 2022, reflecting
20% growth.
- Recurring revenue grew 20% from the first quarter of 2022.
- Net income was $15.3 million or $0.41 per diluted share,
compared to net income of $12.6 million or $0.34 per diluted share
in the first quarter of 2022.
- Non-GAAP income per diluted share was $0.67, compared to
non-GAAP income per diluted share of $0.55 in the first quarter of
2022.
- Adjusted EBITDA for the first quarter of 2022 increased 16% to
$37.0 million compared to the first quarter of 2022.
“The ongoing expansion of our network is a reflection of SPS’
ability to help retailers, suppliers and emerging brands
successfully and cost effectively adapt to omnichannel retail while
they future-proof their investments in supply chain automation,”
said Archie Black, CEO of SPS Commerce. “I believe our strategy and
our people position SPS Commerce for continued success as we
capitalize on the growth opportunities ahead of us.”
“SPS Commerce’s history of strong financial performance and 89
quarters of consecutive revenue growth underscore the stability of
our business model and our consistent execution. Despite ongoing
macro dynamics, we believe we are better positioned than ever to
deliver on our long-term targets and sustained, profitable growth,”
said Kim Nelson, CFO of SPS Commerce.
Guidance
Second Quarter
2023 Guidance
- Revenue is expected to be in the range of $128.0 million to
$128.8 million.
- Net income per diluted share is expected to be in the range of
$0.30 to $0.31, with fully diluted weighted average shares
outstanding of 37.5 million shares.
- Non-GAAP income per diluted share is expected to be in the
range of $0.62 to $0.63.
- Adjusted EBITDA is expected to be in the range of $36.4 million
to $37.0 million.
- Non-cash, share-based compensation expense is expected to be
$12.8 million, depreciation expense is expected to be $5.0 million,
and amortization expense is expected to be $3.9 million.
Full Year 2023
Guidance
- Revenue is expected to be in the range of $525.5 million to
$527.6 million, representing 17% growth over 2022.
- Net income per diluted share is expected to be in the range of
$1.55 to $1.58, with fully diluted weighted average shares
outstanding of 37.4 million shares.
- Non-GAAP income per diluted share is expected to be in the
range of $2.67 to $2.70.
- Adjusted EBITDA is expected to be in the range of $154.2 to
$155.8 million, representing 17% to 18% growth over 2022.
- Non-cash, share-based compensation expense is expected to be
$45.0 million, depreciation expense is expected to be $19.8
million, and amortization expense is expected to be $15.6
million.
The forward-looking measures and the underlying assumptions
involve significant known and unknown risks and uncertainties, and
actual results may vary materially. The Company does not present a
reconciliation of the forward-looking non-GAAP financial measures,
including Adjusted EBITDA, Adjusted EBITDA margin, and non-GAAP
income per share, to the most directly comparable GAAP financial
measures because it is impractical to forecast certain items
without unreasonable efforts due to the uncertainty and inherent
difficulty of predicting, within a reasonable range, the occurrence
and financial impact of and the periods in which such items may be
recognized.
Quarterly Conference Call
To access the call, please dial 1-833-816-1382, or outside the
U.S. 1-412-317-0475 at least 15 minutes prior to the 3:30 p.m. CT
start time. Please ask to join the SPS Commerce Q1 2023 conference
call. 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 115,000 companies in retail,
distribution, grocery and e-commerce have chosen SPS as their
retail network. SPS has achieved 89 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, AS THE NETWORK GROWS, SO DOES YOUR
OPPORTUNITY, INFINITE RETAIL POWER, MASTERING THE RETAIL GAME and
RSX are marks of SPS Commerce, Inc. and Registered in
the U.S. Patent and Trademark Office. These marks may be
registered or otherwise protected in other countries.
SPS-F
Use of Non-GAAP Financial Measures
To supplement our consolidated financial statements, we provide
investors with Adjusted EBITDA, Adjusted EBITDA Margin, and
non-GAAP income per share, all of which are non-GAAP financial
measures. We believe that these non-GAAP financial measures provide
useful information to our management, Board of Directors, and
investors regarding certain financial and business trends relating
to our financial condition and results of operations.
Our management uses these non-GAAP financial measures to compare
our performance to that of prior periods for trend analyses and
planning purposes. Adjusted EBITDA is also used for purposes of
determining executive and senior management incentive compensation.
We believe these non-GAAP financial measures are useful to an
investor as they are widely used in evaluating operating
performance. Adjusted EBITDA and Adjusted EBITDA Margin are used to
measure 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 capital
structure and the method by which assets were acquired.
These non-GAAP financial measures should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with GAAP. These non-GAAP financial measures exclude
significant expenses and income that are required by GAAP to be
recorded in our consolidated financial statements and are subject
to inherent limitations. Investors should review the
reconciliations of non-GAAP financial measures to the comparable
GAAP financial measures that are included in this press
release.
Adjusted EBITDA Measures:
Adjusted EBITDA consists of net
income adjusted for income tax expense, depreciation and
amortization expense, stock-based compensation expense, realized
gain or loss from foreign currency on cash and investments held,
investment income or loss, and other adjustments as necessary for a
fair presentation.
Adjusted EBITDA Margin consists of
Adjusted EBITDA divided by revenue. Margin, the comparable GAAP
measure of financial performance, consists of net income divided by
revenue.
Non-GAAP Income Per Share Measure:
Non-GAAP income per
share consists of net income adjusted for stock-based
compensation expense, amortization expense related to intangible
assets, realized gain or loss from foreign currency on cash and
investments held, other adjustments as necessary for a fair
presentation, and the corresponding tax impacts of the adjustments
to net income, divided by the weighted average number of shares of
common and diluted stock outstanding during each period.
To quantify the tax effects, we
recalculated income tax expense excluding the direct book and tax
effects of the specific items constituting the non-GAAP
adjustments. 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.
Forward-Looking Statements
This press release may contain 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 and our performance for the
second quarter and full year of 2023, 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,
2022, 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.
SPS COMMERCE,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited; in thousands, except shares)
|
March 31,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
182,304 |
|
|
$ |
162,893 |
|
Short-term investments |
|
51,146 |
|
|
|
51,412 |
|
Accounts receivable |
|
46,654 |
|
|
|
42,501 |
|
Allowance for credit losses |
|
(3,217 |
) |
|
|
(3,066 |
) |
Accounts receivable, net |
|
43,437 |
|
|
|
39,435 |
|
Deferred costs |
|
53,844 |
|
|
|
52,755 |
|
Other assets |
|
15,651 |
|
|
|
16,319 |
|
Total current assets |
|
346,382 |
|
|
|
322,814 |
|
Property and equipment,
net |
|
35,078 |
|
|
|
35,458 |
|
Operating lease right-of-use
assets |
|
8,451 |
|
|
|
9,170 |
|
Goodwill |
|
199,001 |
|
|
|
197,284 |
|
Intangible assets, net |
|
84,536 |
|
|
|
88,352 |
|
Other assets |
|
|
|
Deferred costs, non-current |
|
17,965 |
|
|
|
17,424 |
|
Deferred income tax assets |
|
3,365 |
|
|
|
227 |
|
Other assets, non-current |
|
2,149 |
|
|
|
2,185 |
|
Total assets |
$ |
696,927 |
|
|
$ |
672,914 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
5,339 |
|
|
$ |
11,256 |
|
Accrued compensation |
|
26,431 |
|
|
|
30,235 |
|
Accrued expenses |
|
8,163 |
|
|
|
7,451 |
|
Deferred revenue |
|
62,907 |
|
|
|
57,423 |
|
Operating lease liabilities |
|
4,121 |
|
|
|
4,277 |
|
Total current liabilities |
|
106,961 |
|
|
|
110,642 |
|
Other liabilities |
|
|
|
Deferred revenue, non-current |
|
5,105 |
|
|
|
4,771 |
|
Operating lease liabilities, non-current |
|
11,994 |
|
|
|
13,009 |
|
Deferred income tax liabilities |
|
6,977 |
|
|
|
7,419 |
|
Total liabilities |
|
131,037 |
|
|
|
135,841 |
|
Commitments and
contingencies |
|
|
|
Stockholders' equity |
|
|
|
Common stock |
|
39 |
|
|
|
38 |
|
Treasury Stock |
|
(128,892 |
) |
|
|
(128,892 |
) |
Additional paid-in capital |
|
489,716 |
|
|
|
476,117 |
|
Retained earnings |
|
208,510 |
|
|
|
193,221 |
|
Accumulated other comprehensive loss |
|
(3,483 |
) |
|
|
(3,411 |
) |
Total stockholders’ equity |
|
565,890 |
|
|
|
537,073 |
|
Total liabilities and stockholders’ equity |
$ |
696,927 |
|
|
$ |
672,914 |
|
|
|
|
|
|
|
|
|
SPS COMMERCE,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME(Unaudited; in thousands, except per
share amounts)
|
Three Months EndedMarch 31, |
|
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
125,868 |
|
|
$ |
105,193 |
|
Cost of revenues |
|
42,964 |
|
|
|
35,389 |
|
Gross profit |
|
82,904 |
|
|
|
69,804 |
|
Operating expenses |
|
|
|
Sales and marketing |
|
29,083 |
|
|
|
24,655 |
|
Research and development |
|
12,563 |
|
|
|
10,701 |
|
General and administrative |
|
20,677 |
|
|
|
15,468 |
|
Amortization of intangible assets |
|
3,851 |
|
|
|
2,470 |
|
Total operating expenses |
|
66,174 |
|
|
|
53,294 |
|
Income from operations |
|
16,730 |
|
|
|
16,510 |
|
Other income, net |
|
1,276 |
|
|
|
423 |
|
Income before income
taxes |
|
18,006 |
|
|
|
16,933 |
|
Income tax expense |
|
2,717 |
|
|
|
4,330 |
|
Net income |
$ |
15,289 |
|
|
$ |
12,603 |
|
|
|
|
|
Net income per share |
|
|
|
Basic |
$ |
0.42 |
|
|
$ |
0.35 |
|
Diluted |
$ |
0.41 |
|
|
$ |
0.34 |
|
|
|
|
|
Weighted average common shares
used to compute net income per share |
|
|
|
Basic |
|
36,427 |
|
|
|
36,136 |
|
Diluted |
|
37,155 |
|
|
|
36,989 |
|
|
|
|
|
|
|
|
|
SPS COMMERCE,
INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(Unaudited; in
thousands)
|
Three Months EndedMarch 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating
activities |
|
|
|
Net income |
$ |
15,289 |
|
|
$ |
12,603 |
|
Reconciliation of net income to net cash provided by operating
activities |
|
|
|
Deferred income taxes |
|
(5,147 |
) |
|
|
(269 |
) |
Depreciation and amortization of property and equipment |
|
4,626 |
|
|
|
3,864 |
|
Amortization of intangible assets |
|
3,851 |
|
|
|
2,470 |
|
Provision for credit losses |
|
1,206 |
|
|
|
1,144 |
|
Stock-based compensation |
|
11,780 |
|
|
|
9,015 |
|
Other, net |
|
502 |
|
|
|
(7 |
) |
Changes in assets and liabilities |
|
|
|
Accounts receivable |
|
(6,220 |
) |
|
|
(5,563 |
) |
Deferred costs |
|
(1,679 |
) |
|
|
(2,797 |
) |
Other current and non-current assets |
|
602 |
|
|
|
(6,736 |
) |
Accounts payable |
|
(4,849 |
) |
|
|
(3,229 |
) |
Accrued compensation |
|
(4,417 |
) |
|
|
(10,495 |
) |
Accrued expenses |
|
721 |
|
|
|
(1,746 |
) |
Deferred revenue |
|
5,818 |
|
|
|
6,349 |
|
Operating leases |
|
(452 |
) |
|
|
(256 |
) |
Net cash provided by operating activities |
|
21,631 |
|
|
|
4,347 |
|
Cash flows from investing
activities |
|
|
|
Purchases of property and equipment |
|
(5,261 |
) |
|
|
(4,355 |
) |
Purchases of investments |
|
(34,329 |
) |
|
|
(54,977 |
) |
Maturities of investments |
|
35,000 |
|
|
|
65,000 |
|
Net cash provided by (used in) investing activities |
|
(4,590 |
) |
|
|
5,668 |
|
Cash flows from financing
activities |
|
|
|
Repurchases of common stock |
|
— |
|
|
|
(15,226 |
) |
Net proceeds from exercise of options to purchase common stock |
|
2,184 |
|
|
|
504 |
|
Net proceeds from employee stock purchase plan activity |
|
241 |
|
|
|
147 |
|
Net cash provided by (used in) financing activities |
|
2,425 |
|
|
|
(14,575 |
) |
Effect of foreign currency
exchange rate changes |
|
(55 |
) |
|
|
96 |
|
Net increase (decrease) in
cash and cash equivalents |
|
19,411 |
|
|
|
(4,464 |
) |
Cash and cash equivalents at
beginning of period |
|
162,893 |
|
|
|
207,552 |
|
Cash and cash equivalents at
end of period |
$ |
182,304 |
|
|
$ |
203,088 |
|
|
|
|
|
|
|
|
|
SPS COMMERCE,
INC.NON-GAAP RECONCILIATION(Unaudited; in
thousands, except per share amounts)
Adjusted EBITDA |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
15,289 |
|
|
$ |
12,603 |
|
Income tax expense |
|
2,717 |
|
|
|
4,330 |
|
Depreciation and amortization of property and equipment |
|
4,626 |
|
|
|
3,864 |
|
Amortization of intangible assets |
|
3,851 |
|
|
|
2,470 |
|
Stock-based compensation expense |
|
11,780 |
|
|
|
9,015 |
|
Realized gain from foreign currency on cash and investments
held |
|
(137 |
) |
|
|
(468 |
) |
Investment income |
|
(1,127 |
) |
|
|
(48 |
) |
Adjusted EBITDA |
$ |
36,999 |
|
|
$ |
31,766 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Revenue |
$ |
125,868 |
|
|
$ |
105,193 |
|
|
|
|
|
Net income |
|
15,289 |
|
|
|
12,603 |
|
Margin |
|
12 |
% |
|
|
12 |
% |
|
|
|
|
Adjusted EBITDA |
|
36,999 |
|
|
|
31,766 |
|
Adjusted EBITDA Margin |
|
29 |
% |
|
|
30 |
% |
|
|
|
|
|
|
|
|
Non-GAAP Income |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
15,289 |
|
|
$ |
12,603 |
|
Stock-based compensation expense |
|
11,780 |
|
|
|
9,015 |
|
Amortization of intangible assets |
|
3,851 |
|
|
|
2,470 |
|
Realized gain from foreign currency on cash and investments
held |
|
(137 |
) |
|
|
(468 |
) |
Income tax effects of adjustments |
|
(5,909 |
) |
|
|
(3,219 |
) |
Non-GAAP income |
$ |
24,874 |
|
|
$ |
20,401 |
|
Shares used to compute
non-GAAP income per share |
|
|
|
Basic |
|
36,427 |
|
|
|
36,136 |
|
Diluted |
|
37,155 |
|
|
|
36,989 |
|
Non-GAAP income per share |
|
|
|
Basic |
$ |
0.68 |
|
|
$ |
0.56 |
|
Diluted |
$ |
0.67 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
Contact:Investor RelationsThe Blueshirt GroupIrmina Blaszczyk
& Lisa LaukkanenSPSC@blueshirtgroup.com415-217-4962
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