Core Viewpoint - Growth stocks are appealing due to their above-average financial growth, but identifying strong growth stocks is challenging due to inherent volatility and risks [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - SPS Commerce (SPSC) is currently highlighted as a recommended growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth seen as indicative of strong future prospects [3] - SPS Commerce has a historical EPS growth rate of 21.1%, with projected EPS growth of 13.4% this year, surpassing the industry average of 11.9% [4] Group 3: Cash Flow Growth - Higher-than-average cash flow growth is essential for growth-oriented companies, enabling expansion without reliance on external funding [5] - SPS Commerce's year-over-year cash flow growth stands at 22.6%, significantly higher than the industry average of 1.4% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 21.2%, compared to the industry average of 7.1% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [7] - Current-year earnings estimates for SPS Commerce have increased by 0.6% over the past month, indicating a positive outlook [7] Group 5: Overall Assessment - SPS Commerce has achieved a Growth Score of A and a Zacks Rank 2, suggesting it is a potential outperformer and a solid choice for growth investors [9]

Core Insights - SPS Commerce reported quarterly earnings of $1 per share, exceeding the Zacks Consensus Estimate of $0.9 per share, and showing an increase from $0.8 per share a year ago, resulting in an earnings surprise of +11.11% [1] - The company achieved revenues of $187.4 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.15% and up from $153.6 million year-over-year [2] - SPS Commerce has consistently surpassed consensus EPS estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was +19.05%, with actual earnings of $1 compared to an expected $0.84 per share [1] - The company has topped consensus revenue estimates four times in the last four quarters [2] Stock Performance - SPS Commerce shares have declined approximately 23.9% since the beginning of the year, contrasting with the S&P 500's gain of 8.3% [3] - The current Zacks Rank for SPS Commerce is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.98 on revenues of $193.67 million, and for the current fiscal year, it is $3.93 on revenues of $760.64 million [7] - The outlook for the industry, particularly the Business - Services sector, is currently in the top 37% of Zacks industries, suggesting potential for outperformance [8]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $187.4 million, a 22% increase year-over-year, marking the 98th consecutive quarter of revenue growth [6][14] - Recurring revenue grew 24% year-over-year, with approximately 54,500 recurring revenue customers and an average revenue per user (ARPU) of approximately $13,200 [14] - Adjusted EBITDA increased 27% to $56.1 million compared to $44.2 million in Q2 of the previous year [15] - Total cash and investments at the end of the quarter were $108 million, with $20 million in share repurchases [15] Business Line Data and Key Metrics Changes - The company is focused on supporting suppliers through uncertain times, which is expected to drive technology investments [6][7] - The product portfolio enables stronger collaboration between trading partners, enhancing efficiency and cost savings [8][12] - The revenue recovery solutions acquired are beginning to deliver value to fulfillment customers, with a unified platform approach being a competitive differentiator [11][12] Market Data and Key Metrics Changes - Demand remains strong on the retail side, driven by digitized connections to suppliers and optimized supply chain performance management [18] - Supplier dynamics show heightened spend scrutiny and delayed purchasing decisions, particularly affecting mid-market ERP purchases [19][28] - The company expects revenue growth rates to be at least in the high single digits beyond 2025, with ongoing uncertainties in the macro environment considered [19] Company Strategy and Development Direction - The company aims to capitalize on growth opportunities across an $11 billion total addressable market, adding new customers and driving higher ARPU through cross-selling [19][20] - The strategy includes maintaining a disciplined M&A approach to enhance growth and strengthen market leadership [19] - The company anticipates expanding adjusted EBITDA margins by two percentage points annually through improved gross margins and operational efficiencies [20] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment has led to increased cost-saving measures among suppliers, impacting spending decisions [28][29] - There is confidence in the 2025 guidance despite current uncertainties, with expectations for increased spending from suppliers as conditions normalize [36][37] - The company is optimistic about the potential for growth as macro dynamics stabilize, with a focus on improving customer experience and onboarding efficiency [55][56] Other Important Information - The company has provided guidance for 2025, expecting revenue between $759 million and $763 million, representing approximately 19% to 20% growth over 2024 [17] - Non-GAAP diluted income per share is expected to be in the range of $3.99 to $4.40 for the full year 2025 [17] Q&A Session Summary Question: Can you elaborate on the organic revenue growth rate post-2025? - Management indicated that the high single-digit growth rate considers the current product portfolio, with fulfillment driving growth more than analytics [24][25] Question: How has the macro environment affected customer behavior? - Management observed that while retailer enablement activity remains strong, suppliers are focusing on cost-saving measures, leading to slower deal cycles [28][29] Question: Are there differences in behavior between larger and mid-market customers? - There is more pressure in the mid-market ERP area, with prolonged decision-making observed among customers with revenues between $10 million and $300 million [33] Question: What is the outlook for customer adds and ARPU growth? - Management expects growth from both customer adds and ARPU, with community enablement being a significant driver for new customers [58][79] Question: How is the integration of acquired companies progressing? - The post-merger integration of Supply Pike and Carbon6 is going well, with efforts to consolidate go-to-market teams for better value propositions [47][48]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $187.4 million, representing a 22% increase year-over-year, marking the 98th consecutive quarter of revenue growth [14] - Recurring revenue grew 24% year-over-year, with approximately 54,500 recurring revenue customers and an average revenue per user (ARPU) of approximately $13,200 [14] - Adjusted EBITDA increased by 27% to $56.1 million compared to $44.2 million in Q2 of the previous year [15] - Total cash and investments at the end of the quarter were $108 million, with $20 million in share repurchases [15] Business Line Data and Key Metrics Changes - The company’s product portfolio supports stronger collaboration between trading partners, which is expected to unlock greater efficiency and cost savings [7] - The revenue recovery solutions acquired are beginning to deliver value to fulfillment customers, with a focus on cross-selling opportunities [11] Market Data and Key Metrics Changes - Demand remains strong on the retail side, driven by retailers realizing the value of digitized connections to suppliers [18] - Supplier dynamics are impacted by heightened spend scrutiny and delayed purchasing decisions, particularly in the U.S. market [19][60] Company Strategy and Development Direction - The company aims to empower participants in the retail network to work better together while building resilience against future challenges [13] - The strategy includes a disciplined M&A approach to enhance growth and strengthen market leadership [19] - The company expects to expand adjusted EBITDA margin by two percentage points annually, driven by improvements in gross margin and operational efficiencies [20] Management's Comments on Operating Environment and Future Outlook - Management noted that the current macro environment has led to increased scrutiny on spending among suppliers, affecting purchasing decisions [28] - The company remains optimistic about returning to normal conditions as global trade dynamics stabilize [28] - Beyond 2025, the company expects revenue growth rates to be at least in the high single digits, excluding future acquisitions [19] Other Important Information - The company is focused on improving customer experience and onboarding efficiency, which is expected to enhance gross margin [52] - The integration of acquired companies is progressing well, with a focus on consolidating go-to-market teams for better market reach [45] Q&A Session Summary Question: What is the expected organic revenue growth rate post-2025? - Management indicated that the high single digits growth rate considers the current product portfolio and community enablement activity [22][23] Question: How has the macro environment affected customer behavior? - Management observed that while retailer activity remains strong, suppliers are focusing on cost-saving measures, leading to slower deal cycles [26][28] Question: Are there differences in behavior between larger and smaller customers? - There is more pressure in the mid-market segment, with larger enterprise customers showing healthier demand [32] Question: What is the outlook for adjusted EBITDA margin? - The expectation is for at least a two percentage point increase annually, excluding acquisitions [61] Question: How is the company addressing the integration of acquired products? - The integration of go-to-market teams from recent acquisitions is ongoing, with a focus on cross-selling opportunities [45] Question: What is the health of the SMB customer base? - Customer churn remains consistent, with no significant increase in cancellations, but there is pressure on existing customers to reduce costs [70]

Moving the world of Commerce forward July 2025 Forward-Looking Statements and Non-GAAP Financial Measures This presentation 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 future performance, and any statements about customers or the global economy and our ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, highlighting growth in assets from acquisitions and a 22% revenue increase [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$1.12 billion** driven by acquisitions, while cash decreased due to acquisitions and share repurchases Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $107,603 | $241,017 | -55.3% | | Goodwill | $543,514 | $399,180 | +36.2% | | Intangible assets, net | $237,105 | $181,294 | +30.8% | | Total assets | $1,121,104 | $1,031,230 | +8.7% | | Total liabilities | $171,324 | $176,540 | -3.0% | | Total stockholders' equity | $949,780 | $854,690 | +11.1% | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q2 2025 revenues increased **22%** to **$187.4 million**, with net income up **9%** to **$19.7 million**, and diluted EPS at **$0.52** Three Months Ended June 30, Performance (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $187,400 | $153,596 | +22.0% | | Gross Profit | $127,574 | $101,578 | +25.6% | | Income from Operations | $26,470 | $23,165 | +14.3% | | Net Income | $19,733 | $18,032 | +9.4% | | Diluted EPS | $0.52 | $0.48 | +8.3% | Six Months Ended June 30, Performance (in thousands, except EPS) | Metric | YTD 2025 | YTD 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $368,949 | $303,172 | +21.7% | | Gross Profit | $252,209 | $199,667 | +26.3% | | Income from Operations | $52,426 | $38,568 | +35.9% | | Net Income | $41,929 | $36,035 | +16.4% | | Diluted EPS | $1.10 | $0.96 | +14.6% | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to **$949.8 million**, driven by net income and stock-based compensation, partially offset by share repurchases Changes in Stockholders' Equity - Six Months Ended June 30, 2025 (in thousands) | Item | Amount | | :--- | :--- | | Balance, December 31, 2024 | $854,690 | | Net Income | $41,929 | | Stock-based compensation | $27,357 | | Repurchases of common stock | ($60,000) | | Reissuances of treasury stock | $67,594 | | Foreign currency translation | $10,378 | | Balance, June 30, 2025 | $949,780 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was **$72.3 million**, while investing activities used **$155.4 million** for acquisitions, leading to a **$133.4 million** net cash decrease Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $72,306 | $63,506 | | Net cash used in investing activities | ($155,443) | ($11,929) | | Net cash used in financing activities | ($51,726) | ($29,950) | | Net increase (decrease) in cash | ($133,414) | $21,151 | | Cash at end of period | $107,603 | $240,232 | - The primary use of cash in investing activities was **$142.6 million** for a business acquisition, a significant increase from the **$29.3 million** used for acquisitions in the same period of 2024[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures cover accounting policies, the **$210.2 million** Carbon6 acquisition, and recurring revenues comprising **95%** of total revenue - On February 4, 2025, the company acquired Carbon6 Technologies, Inc. for a total consideration of **$210.2 million**, comprised of **$142.5 million** in cash and **$67.7 million** in SPS common stock[29](index=29&type=chunk) - Recurring revenues accounted for **96%** of total revenues for the three months ended June 30, 2025, up from **94%** in the prior year period[90](index=90&type=chunk) - Goodwill increased by **$144.3 million** in the first six months of 2025, primarily due to business acquisitions[53](index=53&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **22%** Q2 revenue growth driven by customer increases and ARPU, rising operating expenses, and strong liquidity despite acquisition outflows [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q2 2025 revenues increased **22%** to **$187.4 million**, with gross margin at **68%** and net income up **9%** to **$19.7 million** - Revenue growth was driven by a **21%** increase in recurring revenue customers to approximately **54,500** and a **3%** increase in ARPU to approximately **$13,200** for the quarter[96](index=96&type=chunk) - The acquisition of Carbon6 in February 2025 added approximately **8,500** recurring revenue customers[96](index=96&type=chunk) - Increases in operating expenses were primarily due to higher personnel-related costs from increased headcount across all departments to support business growth[91](index=91&type=chunk)[92](index=92&type=chunk) [Non-GAAP Financial Measures](index=21&type=section&id=Non-GAAP%20Financial%20Measures) Q2 2025 Adjusted EBITDA grew to **$56.1 million** with a **30%** margin, and non-GAAP diluted EPS reached **$1.00** Reconciliation of Net Income to Adjusted EBITDA (Three Months Ended June 30, in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $19,733 | $18,032 | | Adjustments | $36,319 | $26,157 | | **Adjusted EBITDA** | **$56,052** | **$44,189** | | **Adjusted EBITDA Margin** | **30%** | **29%** | Reconciliation of Net Income to Non-GAAP Income (Three Months Ended June 30, in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $19,733 | $18,032 | | Non-GAAP adjustments | $18,221 | $12,013 | | **Non-GAAP income** | **$37,954** | **$30,045** | | **Non-GAAP income per share, diluted** | **$1.00** | **$0.80** | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity includes **$107.6 million** in cash and **$67.5 million** in receivables, with **$72.3 million** from operations, deemed sufficient for the next year - Cash used in investing activities increased significantly to **$155.4 million** in the first half of 2025 from **$11.9 million** in the prior year, mainly due to a **$113.3 million** increase in cash used for business acquisitions[119](index=119&type=chunk)[121](index=121&type=chunk) - Cash used in financing activities increased to **$51.7 million** from **$30.0 million** year-over-year, primarily due to a **$22.1 million** increase in share repurchases[119](index=119&type=chunk)[122](index=122&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate and foreign currency risks, with hypothetical changes impacting investment income by **$0.1 million** and foreign cash balances by **$1.5 million** - A hypothetical **50-basis point** change in interest rates would impact investment income by **$0.1 million** for the quarter[128](index=128&type=chunk) - As of June 30, 2025, **14%** of total cash and cash equivalents were held in foreign currencies; a hypothetical **10%** unfavorable change in all foreign currency exchange rates would result in a **$1.5 million** impact on these cash balances[131](index=131&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of June 30, 2025, with no material changes, and Carbon6 internal controls are being integrated - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[133](index=133&type=chunk) - The company is integrating the internal controls for the Carbon6 business, acquired in February 2025, and will include it in its internal control assessment within one year[135](index=135&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal claims or actions - There are no material legal proceedings against the company[138](index=138&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have been reported since the last Annual Report - No material changes to risk factors were reported since the last Annual Report[139](index=139&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Q2 2025 saw **144,786** shares repurchased for approximately **$20.0 million**, with **$40.0 million** remaining for future repurchases Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | April 2025 | 52,497 | $131.82 | $6.9M | | May 2025 | 46,719 | $145.70 | $6.8M | | June 2025 | 45,570 | $137.59 | $6.3M | | **Total Q2** | **144,786** | **$138.11** | **$20.0M** | - As of the end of June 2025, **$40,009,000** remained available for repurchase under the authorized program which expires in July 2026[141](index=141&type=chunk)[142](index=142&type=chunk) [Other Information](index=32&type=section&id=Item%205.%20Other%20Information) Two company officers adopted Rule 10b5-1(c) trading plans for the sale of company securities during Q2 2025 Insider Rule 10b5-1 Trading Plan Adoptions | Name | Title | Adoption Date | Aggregate Shares to be Sold | | :--- | :--- | :--- | :--- | | Kimberly Nelson | Chief Financial Officer | May 1, 2025 | 37,700 | | Dan Juckniess | Chief Revenue Officer | June 12, 2025 | 27,230 | [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including officer certifications and Interactive Data Files

[Company Overview & Q2 2025 Performance](index=1&type=section&id=Company%20Overview%20%26%20Q2%202025%20Performance) This section provides an overview of SPS Commerce and its financial performance for the second quarter of 2025, including management insights and company background [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) SPS Commerce reported its 98th consecutive quarter of topline growth, with significant increases in revenue, recurring revenue, net income, non-GAAP EPS, and Adjusted EBITDA for Q2 2025 compared to Q2 2024. The company also conducted share repurchases | Metric | Q2 2025 (millions USD) | Q2 2024 (millions USD) | YoY Growth | | :--------------------------------- | :--------------------- | :--------------------- | :--------- | | Revenue | $187.4 | $153.6 | 22% | | Recurring Revenue | - | - | 24% | | Net income | $19.7 | $18.0 | 9.4% | | Net income per diluted share | $0.52 | $0.48 | 8.3% | | Non-GAAP income per diluted share | $1.00 | $0.80 | 25.0% | | Adjusted EBITDA | $56.1 | - | 27% | - Share repurchases in the second quarter of 2025 totaled **$20.0 million**[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Chad Collins highlighted SPS Commerce's unique position as a full-service EDI solution, enabling stronger collaboration and efficiency for trading partners, which he believes positions the company for long-term growth. CFO Kim Nelson affirmed strong Q2 performance, confidence in the full-year 2025 outlook, and the company's ability to capitalize on growth opportunities in its large addressable market while demonstrating operating leverage and business model resilience - SPS Commerce is positioned as the only full-service EDI solution on the market, uniquely helping suppliers maintain EDI compliance with frequently changing retailer requirements[3](index=3&type=chunk) - The product portfolio enables stronger collaboration between trading partners, unlocking greater efficiency, cost savings, and shared success, positioning SPS for long-term growth[3](index=3&type=chunk) - Management remains confident in the full-year 2025 outlook and is well-positioned to capitalize on growth opportunities across its large addressable market, demonstrating strong operating leverage and business model resilience[3](index=3&type=chunk) [About SPS Commerce](index=2&type=section&id=About%20SPS%20Commerce) SPS Commerce is a leading retail network connecting trading partners globally to optimize supply chain operations. It serves over 50,000 recurring revenue customers across various sectors with cloud technology, customer service, and expert support, boasting 98 consecutive quarters of revenue growth - SPS Commerce is the world's leading retail network, connecting trading partners around the globe to optimize supply chain operations[9](index=9&type=chunk) - The company supports over **50,000 recurring revenue customers** in retail, grocery, distribution, supply, manufacturing, and logistics[9](index=9&type=chunk) - SPS Commerce has achieved **98 consecutive quarters of revenue growth**[9](index=9&type=chunk) [Financial Guidance](index=2&type=section&id=Financial%20Guidance) This section outlines SPS Commerce's financial projections for the third quarter and the full fiscal year 2025, including revenue, net income, and Adjusted EBITDA estimates [Third Quarter 2025 Guidance](index=2&type=section&id=Third%20Quarter%202025%20Guidance) For Q3 2025, SPS Commerce projects revenue between $191.7 million and $193.2 million, representing 17% to 18% year-over-year growth. Diluted net income per share is expected to be $0.50 to $0.54, with non-GAAP income per diluted share ranging from $0.96 to $1.00. Adjusted EBITDA is forecasted between $57.9 million and $59.9 million | Metric | Range | | :--------------------------------- | :--------------------------------- | | Revenue | $191.7 million - $193.2 million (17-18% YoY growth) | | Net income per diluted share | $0.50 - $0.54 | | Non-GAAP income per diluted share | $0.96 - $1.00 | | Adjusted EBITDA | $57.9 million - $59.9 million | | Fully diluted weighted average shares outstanding | 38.5 million shares | | Non-cash, share-based compensation expense | $16.0 million | | Depreciation expense | $5.6 million | | Amortization expense | $9.5 million | [Fiscal Year 2025 Guidance](index=2&type=section&id=Fiscal%20Year%202025%20Guidance) For the full fiscal year 2025, the company anticipates revenue between $759.0 million and $763.0 million, indicating 19% to 20% growth over 2024. Net income per diluted share is projected to be $2.17 to $2.22, with non-GAAP income per diluted share between $3.99 and $4.04. Adjusted EBITDA is expected to be $230.7 million to $233.7 million, reflecting 24% to 25% growth over 2024 | Metric | Range | | :--------------------------------- | :--------------------------------- | | Revenue | $759.0 million - $763.0 million (19-20% growth over 2024) | | Net income per diluted share | $2.17 - $2.22 | | Non-GAAP income per diluted share | $3.99 - $4.04 | | Adjusted EBITDA | $230.7 million - $233.7 million (24-25% growth over 2024) | | Fully diluted weighted average shares outstanding | 38.3 million shares | | Non-cash, share-based compensation expense | $60.9 million | | Depreciation expense | $21.8 million | | Amortization expense | $37.1 million | [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the use, rationale, and definitions of SPS Commerce's non-GAAP financial measures, providing context for their application in financial reporting and analysis [Use and Rationale of Non-GAAP Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) SPS Commerce uses non-GAAP financial measures like Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income per share to provide additional insights into financial and business trends. These measures are used by management for performance comparison, trend analysis, planning, and executive compensation, as they exclude certain non-operating items to offer a clearer view of core operating performance - Non-GAAP financial measures (Adjusted EBITDA, Adjusted EBITDA Margin, non-GAAP income per share) provide useful information to management, Board of Directors, and investors regarding financial and business trends[12](index=12&type=chunk) - Management uses these non-GAAP measures for performance comparison, trend analyses, planning purposes, and determining executive and senior management incentive compensation[13](index=13&type=chunk) - These non-GAAP measures should not be considered a substitute for GAAP financial measures and exclude significant expenses and income, subject to inherent limitations[14](index=14&type=chunk) [Definitions of Non-GAAP Measures](index=3&type=section&id=Definitions%20of%20Non-GAAP%20Measures) Adjusted EBITDA is defined as net income adjusted for income tax expense, depreciation and amortization, stock-based compensation, investment gains/losses, investment income, and other specific adjustments. Adjusted EBITDA Margin is Adjusted EBITDA divided by revenue. Non-GAAP income per share adjusts net income for stock-based compensation, amortization of intangibles, investment gains/losses, other specific adjustments, and corresponding tax impacts, divided by diluted shares outstanding - **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 necessary adjustments (e.g., expense from disposals of capitalized internally developed software, acquisition-related insurance costs)[15](index=15&type=chunk) - **Adjusted EBITDA Margin** consists of Adjusted EBITDA divided by revenue[16](index=16&type=chunk) - **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 necessary adjustments, and the corresponding tax impacts of these adjustments, divided by the weighted average number of common and diluted shares outstanding[17](index=17&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the condensed consolidated balance sheets, statements of income, and statements of cash flows for SPS Commerce, detailing financial position and performance [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet shows total assets increased to $1,121.1 million as of June 30, 2025, from $1,031.2 million at December 31, 2024. Key changes include a decrease in cash and cash equivalents, an increase in accounts receivable, and significant increases in goodwill and intangible assets, reflecting business acquisitions. Total liabilities decreased slightly, while total stockholders' equity increased | Metric | June 30, 2025 (thousands USD) | December 31, 2024 (thousands USD) | Change (thousands USD) | | :-------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | | Total assets | $1,121,104 | $1,031,230 | +$89,874 | | Cash and cash equivalents | $107,603 | $241,017 | -$133,414 | | Accounts receivable, net | $67,512 | $52,035 | +$15,477 | | Goodwill | $543,514 | $399,180 | +$144,334 | | Intangible assets, net | $237,105 | $181,294 | +$55,811 | | Total liabilities | $171,324 | $176,540 | -$5,216 | | Total stockholders' equity | $949,780 | $854,690 | +$95,090 | [Condensed Consolidated Statements of Income](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For the three months ended June 30, 2025, revenue grew 22% year-over-year to $187.4 million. Net income increased to $19.7 million from $18.0 million in the prior year quarter. For the six months ended June 30, 2025, revenue was $368.9 million, up from $303.2 million, and net income was $41.9 million, up from $36.0 million. Operating expenses, particularly sales and marketing, and amortization of intangible assets, also saw notable increases **Three Months Ended June 30 (in thousands USD):** | Metric | 2025 (thousands USD) | 2024 (thousands USD) | YoY Change | | :-------------------------- | :------------------- | :------------------- | :--------- | | Revenues | $187,400 | $153,596 | +22.0% | | Gross profit | $127,574 | $101,578 | +25.6% | | Income from operations | $26,470 | $23,165 | +14.3% | | Net income | $19,733 | $18,032 | +9.4% | | Diluted EPS | $0.52 | $0.48 | +8.3% | **Six Months Ended June 30 (in thousands USD):** | Metric | 2025 (thousands USD) | 2024 (thousands USD) | YoY Change | | :-------------------------- | :------------------- | :------------------- | :--------- | | Revenues | $368,949 | $303,172 | +21.7% | | Gross profit | $252,209 | $199,667 | +26.3% | | Income from operations | $52,426 | $38,568 | +36.0% | | Net income | $41,929 | $36,035 | +16.4% | | Diluted EPS | $1.10 | $0.96 | +14.6% | - Amortization of intangible assets significantly increased for both the three and six months ended June 30, 2025, reflecting recent acquisitions[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash provided by operating activities increased to $72.3 million from $63.5 million in the prior year. However, net cash used in investing activities significantly increased to $155.4 million, primarily due to a substantial increase in business acquisitions. Net cash used in financing activities also increased, mainly due to higher common stock repurchases. Overall, cash and cash equivalents decreased by $133.4 million during the period **Six Months Ended June 30 (in thousands USD):** | Cash Flow Activity | 2025 (thousands USD) | 2024 (thousands USD) | Change (thousands USD) | | :------------------------------------ | :------------------- | :------------------- | :--------------------- | | Net cash provided by operating activities | $72,306 | $63,506 | +$8,800 | | Net cash used in investing activities | $(155,443) | $(11,929) | $(143,514) | | Net cash used in financing activities | $(51,726) | $(29,950) | $(21,776) | | Net increase (decrease) in cash and cash equivalents | $(133,414) | $21,151 | $(154,565) | - Acquisition of business, net, significantly increased cash outflow in investing activities to **$(142,628) thousand** in H1 2025 from **$(29,343) thousand** in H1 2024[24](index=24&type=chunk) - Repurchases of common stock increased to **$(59,558) thousand** in H1 2025 from **$(37,483) thousand** in H1 2024[24](index=24&type=chunk) [Non-GAAP Reconciliations](index=10&type=section&id=NON-GAAP%20RECONCILIATIONS) This section provides reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBITDA and non-GAAP income per share, for both quarterly and year-to-date periods [Adjusted EBITDA Reconciliation](index=10&type=section&id=Adjusted%20EBITDA) For Q2 2025, Adjusted EBITDA was $56.1 million, up from $44.2 million in Q2 2024, resulting in an Adjusted EBITDA Margin of 30% (up from 29%). For the six months ended June 30, 2025, Adjusted EBITDA was $110.4 million, up from $88.6 million, maintaining a 30% Adjusted EBITDA Margin. Key adjustments include stock-based compensation and amortization of intangible assets **Adjusted EBITDA (Three Months Ended June 30, in thousands USD):** | Metric | 2025 (thousands USD) | 2024 (thousands USD) | YoY Change | | :-------------------------- | :------------------- | :------------------- | :--------- | | Net income | $19,733 | $18,032 | +9.4% | | Stock-based compensation expense | $14,998 | $11,494 | +30.5% | | Amortization of intangible assets | $9,509 | $4,840 | +96.5% | | Adjusted EBITDA | $56,052 | $44,189 | +26.8% | | Adjusted EBITDA Margin | 30% | 29% | +1 pp | **Adjusted EBITDA (Six Months Ended June 30, in thousands USD):** | Metric | 2025 (thousands USD) | 2024 (thousands USD) | YoY Change | | :-------------------------- | :------------------- | :------------------- | :--------- | | Net income | $41,929 | $36,035 | +16.4% | | Stock-based compensation expense | $28,865 | $31,512 | -8.4% | | Amortization of intangible assets | $18,097 | $9,178 | +97.2% | | Adjusted EBITDA | $110,425 | $88,591 | +24.6% | | Adjusted EBITDA Margin | 30% | 29% | +1 pp | [Non-GAAP Income per Share Reconciliation](index=10&type=section&id=Non-GAAP%20Income%20per%20Share) For Q2 2025, non-GAAP diluted income per share was $1.00, compared to $0.80 in Q2 2024. For the six months ended June 30, 2025, non-GAAP diluted income per share was $1.99, up from $1.66 in the prior year period. These figures reflect adjustments primarily for stock-based compensation, amortization of intangible assets, and their tax effects **Non-GAAP Income per Share (Three Months Ended June 30, USD):** | Metric | 2025 (USD) | 2024 (USD) | YoY Change | | :------------------------------------ | :--------- | :--------- | :--------- | | Net income per share, diluted | $0.52 | $0.48 | +8.3% | | Non-GAAP adjustments to net income per share, diluted | $0.48 | $0.32 | +50.0% | | Non-GAAP income per share, diluted | $1.00 | $0.80 | +25.0% | **Non-GAAP Income per Share (Six Months Ended June 30, USD):** | Metric | 2025 (USD) | 2024 (USD) | YoY Change | | :------------------------------------ | :--------- | :--------- | :--------- | | Net income per share, diluted | $1.10 | $0.96 | +14.6% | | Non-GAAP adjustments to net income per share, diluted | $0.89 | $0.70 | +27.1% | | Non-GAAP income per share, diluted | $1.99 | $1.66 | +19.9% | [Other Information](index=2&type=section&id=Other%20Information) This section provides details on the quarterly conference call and includes important disclaimers regarding forward-looking statements [Quarterly Conference Call](index=2&type=section&id=Quarterly%20Conference%20Call) Details for accessing the Q2 2025 conference call, including dial-in numbers and webcast information, are provided. A replay will also be available on the company's investor relations website - The Q2 2025 conference call is scheduled for **3:30 p.m. CT**[8](index=8&type=chunk) - To access the call, dial **1-833-816-1382 (U.S.)** or **1-412-317-0475 (outside U.S.)**[8](index=8&type=chunk) - A live webcast and replay will be available at http://investors.spscommerce.com under the Events and Presentations menu[8](index=8&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, emphasizing that actual results may differ materially due to known and unknown risks and uncertainties. It advises against undue reliance on these statements and disclaims any obligation to update them - This press release may contain forward-looking statements regarding management's view of SPS Commerce's future expectations, plans, and prospects, including performance for Q3 and full year 2025[18](index=18&type=chunk) - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[18](index=18&type=chunk) - SPS Commerce expressly disclaims any intent or obligation to update or revise any forward-looking statements[18](index=18&type=chunk)

Company delivers 98th consecutive quarter of topline growth Second quarter 2025 revenue grew 22% and recurring revenue grew 24% from the second quarter of 2024 MINNEAPOLIS, July 30, 2025 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (NASDAQ: SPSC), a leader in retail supply chain cloud services, today announced financial results for the second quarter ended June 30, 2025. Financial Highlights Second Quarter 2025 Financial Highlights Revenue was $187.4 million in the second quarter of 2025, compared to $153.6 milli ...

Core Insights - SPS Commerce has a strong track record of exceeding earnings estimates, particularly in the last two quarters, with an average surprise of 10.67% [2][6] - The company reported earnings of $1 per share in the last quarter, surpassing the Zacks Consensus Estimate of $0.84 per share by 19.05% [3] - For the previous quarter, SPS Commerce's earnings were $0.89 per share against an expectation of $0.87, resulting in a surprise of 2.30% [3] Earnings Estimates and Predictions - Estimates for SPS Commerce have been increasing, driven by its history of earnings surprises [6] - The stock has a positive Zacks Earnings ESP of +0.89%, indicating bullish sentiment among analysts regarding its earnings prospects [9] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat in the upcoming report [9] Earnings ESP and Market Behavior - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [7] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [8] - It is crucial for investors to check a company's Earnings ESP before quarterly releases to enhance the probability of successful investment decisions [11]

Core Viewpoint - The market anticipates that SPS Commerce (SPSC) will report a year-over-year increase in earnings and revenues for the quarter ended June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The Zacks Consensus Estimate predicts quarterly earnings of $0.90 per share, reflecting a +12.5% change year-over-year, while revenues are expected to reach $185.27 million, up 20.6% from the previous year [3]. - The consensus EPS estimate has been revised 1.21% higher in the last 30 days, indicating a positive reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +0.89% for SPS Commerce, suggesting a likelihood of beating the consensus EPS estimate [12]. - The stock currently holds a Zacks Rank of 3, indicating a neutral outlook [12]. Historical Performance - SPS Commerce has consistently beaten consensus EPS estimates, achieving this in the last four quarters, including a +19.05% surprise in the most recent quarter where actual earnings were $1.00 compared to an expected $0.84 [13][14]. Conclusion - While SPS Commerce is positioned as a strong candidate for an earnings beat, other factors should also be considered when evaluating the stock ahead of its earnings release [17].