• SPS Commerce Reports First Quarter 2024 Financial Results

    Source: Nasdaq GlobeNewswire / 25 Apr 2024 15:05:35   America/Chicago

    Company delivers 93rd consecutive quarter of topline growth

    Revenue and recurring revenue growth of 19% year-over-year

    MINNEAPOLIS, April 25, 2024 (GLOBE NEWSWIRE) --  SPS Commerce, Inc. (NASDAQ: SPSC), a leader in retail supply chain cloud services, today announced financial results for the first quarter ended March 31, 2024.

    Financial Highlights

    First Quarter 2024 Financial Highlights

    • Revenue was $149.6 million in the first quarter of 2024, compared to $125.9 million in the first quarter of 2023, reflecting 19% growth.
    • Recurring revenue grew 19% from the first quarter of 2023.
    • Net income was $18.0 million or $0.48 per diluted share, compared to net income of $15.3 million or $0.41 per diluted share in the first quarter of 2023.
    • Non-GAAP income per diluted share was $0.86, compared to non-GAAP income per diluted share of $0.67 in the first quarter of 2023.
    • Adjusted EBITDA for the first quarter of 2024 increased 20% to $44.4 million compared to the first quarter of 2023.
    • Share repurchases in the first quarter of 2024 totaled $20 million.

    “SPS’ vast network and go-to-market strategy are unique differentiators of our business model, evidenced by our strong channel partnerships and longstanding customer relationships,” said Chad Collins, CEO of SPS Commerce. “Ongoing investments in supply chain management, coupled with SPS’ competitive position underscore our conviction in the growth opportunity ahead of us.”

    “SPS Commerce delivered a strong start to the year and the 93rd consecutive quarter of revenue growth,” said Kim Nelson, CFO of SPS Commerce.   “As we capitalize on ongoing opportunities across our addressable markets, we continue to invest in our solutions and customer experience to strengthen our competitive position across the largest network of trading partners in the retail supply chain.”

    Guidance

    Second Quarter 2024 Guidance

    • Revenue is expected to be in the range of $150.9 million to $151.7 million.
    • Net income per diluted share is expected to be in the range of $0.45 to $0.46, with fully diluted weighted average shares outstanding of 37.9 million shares.
    • Non-GAAP income per diluted share is expected to be in the range of $0.75 to $0.76.
    • Adjusted EBITDA is expected to be in the range of $43.4 million to $44.1 million.
    • Non-cash, share-based compensation expense is expected to be $11.7 million, depreciation expense is expected to be $4.7 million, and amortization expense is expected to be $4.6 million.

    Fiscal Year 2024 Guidance

    • Revenue is expected to be in the range of $619.9 million to $621.9 million, representing 15% to 16% growth over 2023.
    • Net income per diluted share is expected to be in the range of $1.99 to $2.02, with fully diluted weighted average shares outstanding of 37.9 million shares.
    • Non-GAAP income per diluted share is expected to be in the range of $3.28 to $3.32.
    • Adjusted EBITDA is expected to be in the range of $185.1 to $186.7 million, representing 17% to 18% growth over 2023.
    • Non-cash, share-based compensation expense is expected to be $56.1 million, depreciation expense is expected to be $19.5 million, and amortization expense is expected to be $18.1 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 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. To date, more than 120,000 companies in retail, grocery, distribution, supply, and logistics have chosen SPS as their retail network. SPS has achieved 93 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 condensed 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 condensed 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, and other adjustments as necessary for a fair presentation. 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 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. 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 second quarter and full year of 2024, 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.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands, except shares)

     March 31,
    2024
     December 31,
    2023
    ASSETS(unaudited)  
    Current assets   
    Cash and cash equivalents$234,637  $219,081 
    Short-term investments 56,174   56,359 
    Accounts receivable 55,724   50,160 
    Allowance for credit losses (3,589)  (3,320)
    Accounts receivable, net 52,135   46,840 
    Deferred costs 63,647   62,403 
    Other assets 13,695   16,758 
    Total current assets 420,288   401,441 
    Property and equipment, net 34,971   36,043 
    Operating lease right-of-use assets 7,285   7,862 
    Goodwill 248,813   249,176 
    Intangible assets, net 99,289   107,344 
    Other assets   
    Deferred costs, non-current 20,601   20,347 
    Deferred income tax assets 7,483   505 
    Other assets, non-current 1,117   1,126 
    Total assets$839,847  $823,844 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities   
    Accounts payable$12,303  $7,420 
    Accrued compensation 32,990   41,588 
    Accrued expenses 10,744   8,014 
    Deferred revenue 73,701   69,187 
    Operating lease liabilities 4,478   4,460 
    Total current liabilities 134,216   130,669 
    Other liabilities   
    Deferred revenue, non-current 6,473   6,930 
    Operating lease liabilities, non-current 8,425   9,569 
    Deferred income tax liabilities 7,536   8,972 
    Other liabilities, non-current 232   229 
    Total liabilities 156,882   156,369 
    Commitments and contingencies   
    Stockholders' equity   
    Common stock 39   39 
    Treasury stock (148,892)  (128,892)
    Additional paid-in capital 557,998   537,061 
    Retained earnings 277,048   259,045 
    Accumulated other comprehensive gain (loss) (3,228)  222 
    Total stockholders’ equity 682,965   667,475 
    Total liabilities and stockholders’ equity$839,847  $823,844 



    SPS COMMERCE, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited; in thousands, except per share amounts)
     Three Months Ended
    March 31,
      2024  2023
    Revenues$149,576 $125,868
    Cost of revenues 51,487  42,964
    Gross profit 98,089  82,904
    Operating expenses   
    Sales and marketing 36,432  29,083
    Research and development 16,009  12,563
    General and administrative 25,907  20,677
    Amortization of intangible assets 4,338  3,851
    Total operating expenses 82,686  66,174
    Income from operations 15,403  16,730
    Other income, net 3,132  1,276
    Income before income taxes 18,535  18,006
    Income tax expense 532  2,717
    Net income$18,003 $15,289
        
    Net income per share   
    Basic$0.49 $0.42
    Diluted$0.48 $0.41
        
    Weighted average common shares used to compute net income per share   
    Basic 37,049  36,427
    Diluted 37,686  37,155


    SPS COMMERCE, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited; in thousands)
     Three Months Ended
    March 31,
      2024   2023 
    Cash flows from operating activities   
    Net income$18,003  $15,289 
    Reconciliation of net income to net cash provided by operating activities   
    Deferred income taxes (7,070)  (5,147)
    Depreciation and amortization of property and equipment 4,694   4,626 
    Amortization of intangible assets 4,338   3,851 
    Provision for credit losses 1,408   1,206 
    Stock-based compensation 20,018   11,780 
    Other, net (431)  502 
    Changes in assets and liabilities   
    Accounts receivable (6,759)  (6,220)
    Deferred costs (1,651)  (1,679)
    Other assets and liabilities 3,030   602 
    Accounts payable 5,098   (4,849)
    Accrued compensation (9,518)  (4,417)
    Accrued expenses (674)  721 
    Deferred revenue 4,129   5,818 
    Operating leases (551)  (452)
    Net cash provided by operating activities 34,064   21,631 
    Cash flows from investing activities   
    Purchases of property and equipment (3,533)  (5,261)
    Purchases of investments (44,412)  (34,329)
    Maturities of investments 45,000   35,000 
    Net cash used in investing activities (2,945)  (4,590)
    Cash flows from financing activities   
    Repurchases of common stock (16,540)   
    Net proceeds from exercise of options to purchase common stock 1,260   2,184 
    Net proceeds from employee stock purchase plan activity 391   241 
    Net cash provided by (used in) financing activities (14,889)  2,425 
    Effect of foreign currency exchange rate changes (674)  (55)
    Net increase in cash and cash equivalents 15,556   19,411 
    Cash and cash equivalents at beginning of period 219,081   162,893 
    Cash and cash equivalents at end of period$234,637  $182,304 



    SPS COMMERCE, INC.
    NON-GAAP RECONCILIATION
    (Unaudited; in thousands, except Margin, Adjusted EBITDA Margin, and per share amounts)
    Adjusted EBITDA
     Three Months Ended
    March 31,
      2024   2023 
    Net income$18,003  $15,289 
    Income tax expense 532   2,717 
    Depreciation and amortization of property and equipment 4,694   4,626 
    Amortization of intangible assets 4,338   3,851 
    Stock-based compensation expense 20,018   11,780 
    Realized gain from foreign currency on cash and investments held (304)  (137)
    Investment income (2,879)  (1,127)
    Adjusted EBITDA$44,402  $36,999 


    Adjusted EBITDA Margin
     Three Months Ended
    March 31,
      2024   2023 
    Revenue$149,576  $125,868 
        
    Net income 18,003   15,289 
    Margin 12%  12%
        
    Adjusted EBITDA 44,402   36,999 
    Adjusted EBITDA Margin 30%  29%


    Non-GAAP Income per Share
     Three Months Ended
    March 31,
      2024   2023 
    Net income$18,003  $15,289 
    Stock-based compensation expense 20,018   11,780 
    Amortization of intangible assets 4,338   3,851 
    Realized gain from foreign currency on cash and investments held (304)  (137)
    Income tax effects of adjustments (9,554)  (5,909)
    Non-GAAP income$32,501  $24,874 
        
    Shares used to compute net income and non-GAAP income per share   
    Basic 37,049   36,427 
    Diluted 37,686   37,155 
        
    Net income per share, basic$0.49  $0.42 
    Non-GAAP adjustments to net income per share, basic 0.39   0.26 
    Non-GAAP income per share, basic$0.88  $0.68 
        
    Net income per share, diluted$0.48  $0.41 
    Non-GAAP adjustments to net income per share, diluted 0.38   0.26 
    Non-GAAP income per share, diluted$0.86  $0.67 


    Contact:

    Investor Relations
    The Blueshirt Group
    Irmina Blaszczyk & Lisa Laukkanen
    SPSC@blueshirtgroup.com
    415-217-4962


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