SPSC SPS Commerce Inc

SPS Commerce, Inc. (NASDAQ: SPSC), a leader in retail supply chain cloud services, today announced financial results for the fourth quarter and year ended December 31, 2024.

Financial Highlights

Fourth Quarter 2024 Financial Highlights

• Revenue was $170.9 million in the fourth quarter of 2024, compared to $145.0 million in the fourth quarter of 2023, reflecting 18% growth.
• Recurring revenue grew 19% from the fourth quarter of 2023.
• Net income was $17.6 million or $0.46 per diluted share, compared to net income of $19.0 million or $0.51 per diluted share in the fourth quarter of 2023.
• Non-GAAP income per diluted share was $0.89, compared to non-GAAP income per diluted share of $0.75 in the fourth quarter of 2023.
• Adjusted EBITDA for the fourth quarter of 2024 increased 18% to $49.6 million compared to the fourth quarter of 2023.

Fiscal Year 2024 Financial Highlights

• Revenue was $637.8 million for the year ended December 31, 2024, compared to $536.9 million for the year ended December 31, 2023, reflecting 19% growth.
• Recurring revenue grew 20% from the year ended December 31, 2023.
• Net income was $77.1 million or $2.04 per diluted share for the year ended December 31, 2024, compared to net income of $65.8 million or $1.76 per diluted share for the comparable period in 2023, reflecting 17% growth in year-over-year net income.
• Non-GAAP income per diluted share was $3.48, compared to non-GAAP income per diluted share of $2.85 in the year ended December 31, 2023.
• Adjusted EBITDA for the year ended December 31, 2024 increased 18% to $186.6 million compared to the year ended December 31, 2023.

“We are pleased with what we have accomplished in 2024, and I would like to congratulate SPS Commerce employees for their unwavering commitment to excellence and exceptional understanding of the retail supply chain,” said Chad Collins, CEO of SPS Commerce. “With the depth and breadth of solutions we offer today, we are uniquely positioned to support all trading relationships and continue growing our network to move the world of commerce forward.”

“We believe that SPS’ leading retail network and competitive product portfolio position us well to continue on our profitable growth trajectory,” said Kim Nelson, CFO of SPS Commerce.

Guidance*

First Quarter 2025 Guidance

• Revenue is expected to be in the range of $178.5 million to $180.0 million, representing 19% to 20% year-over-year growth.
• Net income per diluted share is expected to be in the range of $0.39 to $0.41, with fully diluted weighted average shares outstanding of 38.7 million shares.
• Non-GAAP income per diluted share is expected to be in the range of $0.82 to $0.84.
• Adjusted EBITDA is expected to be in the range of $49.5 million to $50.5 million.
• Non-cash, share-based compensation expense is expected to be $15.0 million, depreciation expense is expected to be $5.4 million, and amortization expense is expected to be $9.2 million.

Fiscal Year 2025 Guidance

• Revenue is expected to be in the range of $758.0 million to $763.0 million, representing 19% to 20% growth over 2024.
• Net income per diluted share is expected to be in the range of $1.93 to $1.99, with fully diluted weighted average shares outstanding of 38.9 million shares.
• Non-GAAP income per diluted share is expected to be in the range of $3.78 to $3.84.
• Adjusted EBITDA is expected to be in the range of $227.5 million to $231.0 million, representing 22% to 24% growth over 2024.
• Non-cash, share-based compensation expense is expected to be $63.0 million, depreciation expense is expected to be $23.5 million, and amortization expense is expected to be $39.8 million.

*Inclusive of the expected results of the Carbon6 acquisition

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 Q4 2024 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. Over 45,000 recurring revenue customers in retail, grocery, distribution, supply, manufacturing, and logistics are using SPS as their retail network. SPS has achieved 96 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 and INFINITE RETAIL POWER are marks of SPS Commerce, Inc. and registered in the U.S. Patent and Trademark Office, along with other SPS marks. Such marks may also 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 investments held and foreign currency impact on cash and investments, investment income, and other adjustments as necessary for a fair presentation. Other adjustments for the year ended December 31, 2024 included the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs. Other adjustments for the year ended December 31, 2023 included the expense impacts from disposals of certain capitalized internally developed software and acquisition-related employee severance costs. Net income is the comparable GAAP measure of financial performance.

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 investments held and foreign currency impact on cash and investments, other adjustments as necessary for a fair presentation, including for the year ended December 31, 2024 the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs, and for the year ended December 31, 2023 the expense impacts from disposals of certain capitalized internally developed software and acquisition-related employee severance costs, 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. Net income per share, the comparable GAAP measure of financial performance, consists of 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 first quarter and full year of 2025, 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, 2023, 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.CONSOLIDATED BALANCE SHEETS(Unaudited; in thousands, except shares)
	December 31,2024				December 31,2023
ASSETS
Current assets
Cash and cash equivalents	$	241,017			$	219,081
Short-term investments		—				56,359
Accounts receivable		56,214				50,160
Allowance for credit losses		(4,179	)			(3,320	)
Accounts receivable, net		52,035				46,840
Deferred costs		65,342				62,403
Other assets		23,513				16,758
Total current assets		381,907				401,441
Property and equipment, net		37,547				36,043
Operating lease right-of-use assets		8,192				7,862
Goodwill		399,180				249,176
Intangible assets, net		181,294				107,344
Other assets
Deferred costs, non-current		20,572				20,347
Deferred income tax assets		505				505
Other assets, non-current		2,033				1,126
Total assets	$	1,031,230			$	823,844
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	8,577			$	7,420
Accrued compensation		47,160				41,588
Accrued expenses		12,108				8,014
Deferred revenue		74,256				69,187
Operating lease liabilities		4,583				4,460
Total current liabilities		146,684				130,669
Other liabilities
Deferred revenue, non-current		6,189				6,930
Operating lease liabilities, non-current		7,885				9,569
Deferred income tax liabilities		15,541				8,972
Other liabilities, non-current		241				229
Total liabilities		176,540				156,369
Commitments and contingencies
Stockholders' equity
Common stock		40				39
Treasury stock		(99,748	)			(128,892	)
Additional paid-in capital		627,982				537,061
Retained earnings		336,099				259,045
Accumulated other comprehensive gain (loss)		(9,683	)			222
Total stockholders’ equity		854,690				667,475
Total liabilities and stockholders’ equity	$	1,031,230			$	823,844

SPS COMMERCE, INC.CONSOLIDATED STATEMENTS OF INCOME(Unaudited; in thousands, except per share amounts)
	Three Months EndedDecember 31,								Twelve Months EndedDecember 31,
		2024				2023				2024				2023
Revenues	$	170,907			$	144,965			$	637,765			$	536,910
Cost of revenues		55,585				49,040				210,714				182,069
Gross profit		115,322				95,925				427,051				354,841
Operating expenses
Sales and marketing		39,220				33,214				148,920				122,936
Research and development		17,142				14,216				62,809				53,654
General and administrative		26,354				20,612				102,929				84,887
Amortization of intangible assets		7,862				4,998				23,510				16,116
Total operating expenses		90,578				73,040				338,168				277,593
Income from operations		24,744				22,885				88,883				77,248
Other income (expense), net		(373	)			3,456				10,593				8,315
Income before income taxes		24,371				26,341				99,476				85,563
Income tax expense		6,812				7,330				22,422				19,739
Net income	$	17,559			$	19,011			$	77,054			$	65,824
Net income per share
Basic	$	0.47			$	0.52			$	2.07			$	1.80
Diluted	$	0.46			$	0.51			$	2.04			$	1.76
Weighted average common shares used to compute net income per share
Basic		37,646				36,831				37,306				36,646
Diluted		38,133				37,640				37,856				37,475

SPS COMMERCE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited; in thousands)
	Twelve Months EndedDecember 31,
		2024				2023
Cash flows from operating activities
Net income	$	77,054			$	65,824
Reconciliation of net income to net cash provided by operating activities
Deferred income taxes		(9,786	)			(10,079	)
Depreciation and amortization of property and equipment		18,721				18,631
Amortization of intangible assets		23,510				16,116
Provision for credit losses		7,683				5,707
Stock-based compensation		54,557				45,508
Other, net		577				2,415
Changes in assets and liabilities, net of effects of acquisitions
Accounts receivable		(9,653	)			(11,949	)
Deferred costs		(3,120	)			(10,724	)
Other assets and liabilities		(7,313	)			1,834
Accounts payable		796				(3,947	)
Accrued compensation		1,434				7,143
Accrued expenses		4,115				1,302
Deferred revenue		728				6,464
Operating leases		(1,905	)			(1,947	)
Net cash provided by operating activities		157,398				132,298
Cash flows from investing activities
Purchases of property and equipment		(20,046	)			(19,761	)
Purchases of investments		(85,759	)			(133,994	)
Maturities of investments		143,275				131,331
Acquisition of businesses, net		(147,924	)			(70,218	)
Net cash used in investing activities		(110,454	)			(92,642	)
Cash flows from financing activities
Repurchases of common stock		(37,567	)			—
Net proceeds from exercise of options to purchase common stock		4,714				9,856
Net proceeds from employee stock purchase plan activity		9,827				8,114
Payments for contingent consideration		—				(2,000	)
Net cash provided by (used in) financing activities		(23,026	)			15,970
Effect of foreign currency exchange rate changes		(1,982	)			562
Net increase in cash and cash equivalents		21,936				56,188
Cash and cash equivalents at beginning of period		219,081				162,893
Cash and cash equivalents at end of period	$	241,017			$	219,081
SPS COMMERCE, INC.NON-GAAP RECONCILIATIONS(Unaudited; in thousands, except Margin, Adjusted EBITDA Margin, and per share amounts)

Adjusted EBITDA
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
		2024				2023				2024				2023
Net income	$	17,559			$	19,011			$	77,054			$	65,824
Income tax expense		6,812				7,330				22,422				19,739
Depreciation and amortization of property and equipment		4,711				4,667				18,721				18,631
Amortization of intangible assets		7,862				4,998				23,510				16,116
Stock-based compensation expense		12,293				9,411				54,557				45,508
Realized (gain) loss from investments held and foreign currency impact on cash and investments		2,521				(1,201	)			(115	)			(1,726	)
Investment income		(2,205	)			(2,287	)			(10,582	)			(7,660	)
Other		86				28				1,064				1,198
Adjusted EBITDA	$	49,639			$	41,957			$	186,631			$	157,630

Adjusted EBITDA Margin
	Three Months Ended										Twelve Months Ended
	December 31,										December 31,
	2024					2023					2024					2023
Revenue	$	170,907				$	144,965				$	637,765				$	536,910
Net income		17,559					19,011					77,054					65,824
Margin		10		%			13		%			12		%			12		%
Adjusted EBITDA		49,639					41,957					186,631					157,630
Adjusted EBITDA Margin		29		%			29		%			29		%			29		%

Non-GAAP Income per Share
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
		2024				2023				2024				2023
Net income	$	17,559			$	19,011			$	77,054			$	65,824
Stock-based compensation expense		12,293				9,411				54,557				45,508
Amortization of intangible assets		7,862				4,998				23,510				16,116
Realized (gain) loss from investments held and foreign currency impact on cash and investments		2,521				(1,201	)			(115	)			(1,726	)
Other		86				28				1,064				1,198
Income tax effects of adjustments		(6,371	)			(3,906	)			(24,505	)			(19,983	)
Non-GAAP income	$	33,950			$	28,341			$	131,565			$	106,937
Shares used to compute net income and non-GAAP income per share
Basic		37,646				36,831				37,306				36,646
Diluted		38,133				37,640				37,856				37,475
Net income per share, basic	$	0.47			$	0.52			$	2.07			$	1.80
Non-GAAP adjustments to net income per share, basic		0.43				0.25				1.46				1.12
Non-GAAP income per share, basic	$	0.90			$	0.77			$	3.53			$	2.92
Net income per share, diluted	$	0.46			$	0.51			$	2.04			$	1.76
Non-GAAP adjustments to net income per share, diluted		0.43				0.24				1.44				1.09
Non-GAAP income per share, diluted	$	0.89			$	0.75			$	3.48			$	2.85
The annual per share amounts may not cross-sum due to rounding.

Contact:Investor RelationsThe Blueshirt GroupIrmina Blaszczyk & Lisa LaukkanenSPSC@blueshirtgroup.com415-217-4962