[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)

Core Insights - SPS Commerce, Inc. reported a revenue increase of 22% to $187.4 million in Q2 2025 compared to Q2 2024, with recurring revenue growing by 24% during the same period [1][6] - The company achieved a net income of $19.7 million, or $0.52 per diluted share, up from $18.0 million, or $0.48 per diluted share in the previous year [6][22] - Adjusted EBITDA rose by 27% to $56.1 million, reflecting strong operational performance [6][28] Financial Highlights - Revenue for Q2 2025 was $187.4 million, a 22% increase from $153.6 million in Q2 2024 [6][22] - Recurring revenue grew by 24% year-over-year [6] - Net income for Q2 2025 was $19.7 million, compared to $18.0 million in Q2 2024 [6][22] - Non-GAAP income per diluted share increased to $1.00 from $0.80 in Q2 2024 [6][29] - Adjusted EBITDA for Q2 2025 was $56.1 million, up 27% from the previous year [6][28] Guidance - For Q3 2025, revenue is projected to be between $191.7 million and $193.2 million, indicating a year-over-year growth of 17% to 18% [7] - Full-year 2025 revenue is expected to range from $759.0 million to $763.0 million, representing a growth of 19% to 20% over 2024 [7] - Net income per diluted share for Q3 2025 is anticipated to be between $0.50 and $0.54 [7] - Non-GAAP income per diluted share for Q3 2025 is expected to be between $0.96 and $1.00 [7] Company Positioning - SPS Commerce is positioned as a leader in retail supply chain cloud services, emphasizing its unique full-service EDI solution that aids suppliers in maintaining compliance with changing retailer requirements [3] - The company aims to leverage its product portfolio to enhance collaboration among trading partners, driving efficiency and cost savings [3] - Management expresses confidence in the company's long-term growth potential, citing a large addressable market and strong operating leverage [3]

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].

Core Viewpoint - SPS Commerce, Inc. will release its financial results for Q2 2025 on July 30, 2025, and will host a conference call to discuss these results [1] Group 1: Financial Results Announcement - The financial results for the second quarter ended June 30, 2025, will be issued after market close on July 30, 2025 [1] - A conference call to discuss the results is scheduled for 3:30 p.m. Central Time on the same day [1] Group 2: Accessing the Conference Call - Participants can join the call by dialing 1-833-816-1382 or 1-412-317-0475 for international calls, at least 15 minutes prior to the start time [2] - A live webcast of the call will be available on the SPS Commerce investor relations website [2] Group 3: Company Overview - SPS Commerce is a leader in retail supply chain cloud services, connecting trading partners globally to optimize supply chain operations [3] - The company supports over 50,000 recurring revenue customers across various sectors including retail, grocery, distribution, and logistics [3] - SPS Commerce has achieved 97 consecutive quarters of revenue growth and is headquartered in Minneapolis [3]

Summary of SPS Commerce (SPSC) FY Conference Call - June 10, 2025 Company Overview - SPS Commerce operates a cloud-based network connecting retailers and suppliers for efficient supply chain information exchange, primarily focused on the ordering process [4][5] - The company has the largest EDI (Electronic Data Interchange) network in North America, emphasizing community enablement to connect suppliers digitally to retailers [6][10] Key Points Industry and Market Position - SPS Commerce's total addressable market (TAM) is now estimated at $11 billion, up from a previous estimate of $5 billion, reflecting growth in the EDI market [14][15] - The U.S. accounts for approximately $6.5 billion of the TAM, with a potential global supplier base of about 275,000, including 147,000 in the U.S. [15] Revenue Growth and Customer Acquisition - The company reported 300 net new customers in Q1, indicating a reacceleration in network expansion, driven by community enablement programs [10][12] - Revenue growth can come from new customer acquisition or increasing average revenue per customer, influenced by the nature of community enablement programs [11][12] Pricing Model - The core EDI pricing model is based on the number of connections suppliers have within the network, with a fixed fee per connection making up about 80% of revenue [21][23] - A small variable component is based on the number of documents exchanged, which remains stable despite fluctuations in consumer spending [21][23] Research and Development (R&D) - R&D spending has been consistent at about 10% of sales, focusing on enhancing existing products and internal tools, with a growing emphasis on AI and machine learning [24][26] - The company is also developing rule books to help retailers manage their supply chain processes more effectively [26] New Product Development - SPS recently launched a manufacturing supply chain performance suite aimed at co-packers and manufacturers, addressing upstream supply chain needs [28][29] - The company has also acquired revenue recovery software to help suppliers manage chargebacks and deductions from retailers, presenting a significant cross-selling opportunity [32][36] Financial Metrics and Goals - SPS aims for adjusted EBITDA margins of at least 35%, with current margins in the upper twenties [47] - The company targets gross margins in the low to mid-seventies, with ongoing investments in customer experience expected to drive improvements [48][45] International Growth - Currently, 17% of sales are international, with growth ambitions focused on expanding direct sales and community enablement in Europe following the acquisition of Thai Kinetics [51][52] Data Monetization Opportunities - SPS is exploring ways to monetize the data generated from transactions on its network, potentially offering insights for demand planning and forecasting [73] Additional Insights - The company has a strong focus on community enablement programs, which not only drive supplier connections but also enhance revenue opportunities through existing customer relationships [56] - The integration of recent acquisitions is ongoing, with efforts to standardize pricing and service delivery models [40][41] This summary encapsulates the key points discussed during the SPS Commerce FY Conference Call, highlighting the company's strategic initiatives, market position, and financial outlook.

Company Overview - SPS Commerce, Inc. is a leader in retail supply chain cloud services, connecting trading partners globally to optimize supply chain operations for retail partners [2] - The company supports over 50,000 recurring revenue customers across various sectors including retail, grocery, distribution, supply, manufacturing, and logistics [2] - SPS Commerce has achieved 97 consecutive quarters of revenue growth, indicating strong financial performance [2] Upcoming Events - Management will present at the 1st Annual D.A. Davidson Technology & Consumer Conference on June 10, 2025, at 2:40 PM C.T. [1] - A webcast of the presentation will be available on the company's investor relations website [1]

Financial Data and Key Metrics Changes - First quarter revenue grew 21% to $181.5 million, marking the 97th consecutive quarter of revenue growth [8][16] - Recurring revenue increased by 23% year-over-year, with approximately 54,150 recurring revenue customers and an average revenue per user (ARPU) of approximately $13,850 [16] - Adjusted EBITDA rose 22% to $54.4 million compared to $44.4 million in Q1 of the previous year [17] - Total cash and investments at the end of the quarter were $95 million, with approximately $40 million of SPS shares repurchased [18] Business Line Data and Key Metrics Changes - The analytics segment experienced a slight decline of approximately 2% year-over-year, which is expected to remain flat for the year [30][31] - The acquisition of CarbonSix added approximately 8,500 customers, exceeding initial estimates [17][94] Market Data and Key Metrics Changes - SPS Commerce operates a network of over 50,000 suppliers, logistics companies, and buying organizations across various sectors, including retail and manufacturing [15] - The total addressable market for SPS Commerce is estimated at $11 billion [15] Company Strategy and Development Direction - The company is focused on enhancing trading partner relationships through a diverse product portfolio, including fulfillment, analytics, e-invoicing, and revenue recovery [9][10] - SPS Commerce is committed to supporting automation and operational efficiencies in supply chains, which are seen as critical for customer growth and profitability [14][19] Management's Comments on Operating Environment and Future Outlook - Management is closely monitoring trade dynamics and their impact on the retail industry, emphasizing the importance of automation and operational efficiencies [19][21] - Despite macroeconomic uncertainties, the company maintains its full-year revenue growth outlook of 19% to 20% [20][21] Other Important Information - The company expects Q2 2025 revenue to be in the range of $184.5 million to $186.2 million, with adjusted EBITDA expected between $53 million and $54.5 million [18] - Stock-based compensation expense is anticipated to be approximately $15.5 million for the year [19] Q&A Session Summary Question: Insights on cross-sell potential from recent acquisitions - Management noted that the ideal customer profiles for revenue recovery and fulfillment align well, indicating potential for cross-selling opportunities [26][28] Question: Performance of the analytics business - The analytics segment saw a slight decline, attributed to economic conditions, with expectations for it to remain flat for the year [30][31] Question: Impact of tariffs on enablement campaigns - Management confirmed that while tariffs are a concern, there has not yet been a decline in the volume of enablement programs [37][38] Question: Customer growth from CarbonSix acquisition - The acquisition added more customers than initially expected, with a rigorous review process revealing a higher customer count [94][95] Question: Organic customer growth expectations - Management indicated that organic customer growth is expected to remain stable, with strong community enablement activity anticipated [99] Question: Broader economic indicators being monitored - Key indicators include the pipeline of community enablement campaigns and the health of the supplier base [112][113]

Financial Data and Key Metrics Changes - First quarter revenue grew 21% to $181.5 million, marking the 97th consecutive quarter of revenue growth [8][16] - Recurring revenue increased by 23% year-over-year, with approximately 54,150 recurring revenue customers and an average revenue per user (ARPU) of approximately $13,850 [16] - Adjusted EBITDA rose 22% to $54.4 million compared to $44.4 million in Q1 of the previous year [17] - The company ended the quarter with total cash and investments of $95 million and repurchased approximately $40 million of its shares [18] Business Line Data and Key Metrics Changes - The analytics segment experienced a slight decline of approximately 2% year-over-year, which is attributed to economic conditions and tariff uncertainties [30][32] - The acquisition of CarbonSix added approximately 8,500 customers, exceeding initial estimates, and is expected to impact ARPU in the following quarter [17][94] Market Data and Key Metrics Changes - SPS Commerce operates a network of over 50,000 suppliers, logistics companies, and buying organizations across various sectors, including retail and manufacturing, within an $11 billion total addressable market [15] - The company is closely monitoring how current trade dynamics are impacting the retail sector amid economic uncertainties [14][19] Company Strategy and Development Direction - SPS Commerce aims to enhance trading partner relationships through a diverse product portfolio, including fulfillment, analytics, e-invoicing, and supply chain performance solutions [9][10] - The company is focused on automation and operational efficiencies as priorities for trading partners, which are expected to drive future growth [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year 2025 growth outlook despite ongoing macroeconomic uncertainties, emphasizing the resilience of their business model [21] - The company is not currently seeing a decline in the volume of enablement programs, indicating a stable demand environment [37] Other Important Information - The company expects revenue for Q2 2025 to be in the range of $184.5 million to $186.2 million, representing approximately 20% to 21% year-over-year growth [18] - For the full year 2025, revenue is expected to be between $758.5 million and $763 million, reflecting a growth rate of 19% to 20% over 2024 [20] Q&A Session Summary Question: Insights on cross-sell potential from recent acquisitions - Management noted that the ideal customer profiles for revenue recovery and fulfillment products align well, indicating potential for cross-selling opportunities [26][28] Question: Performance of the analytics business - The analytics segment saw a slight decline, attributed to economic conditions, with expectations for it to remain flat for the year [30][31] Question: Impact of tariffs on enablement campaigns - Management confirmed that while tariffs are a concern, they have not yet seen a decline in the pipeline for enablement programs [37][38] Question: Customer growth from CarbonSix acquisition - The acquisition added more customers than initially expected, with a rigorous review process revealing approximately 8,500 customers [94][95] Question: Organic customer growth expectations - Management indicated that organic customer growth is expected to remain stable, with strong community enablement activity anticipated for the year [99] Question: Broader economic indicators being monitored - Key indicators include the pipeline of community enablement campaigns and the health of the supplier base, with no current signs of slowdown in ERP and WMS projects [112][116]