SPS(US:SPSC)2025-07-30 20:29PART I. FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements, highlighting growth in assets from acquisitions and a 22% revenue increase Condensed Consolidated Balance Sheets 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 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 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 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 202418 Notes to Condensed Consolidated Financial Statements 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 stock29 - Recurring revenues accounted for 96% of total revenues for the three months ended June 30, 2025, up from 94% in the prior year period90 - Goodwill increased by $144.3 million in the first six months of 2025, primarily due to business acquisitions53 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses 22% Q2 revenue growth driven by customer increases and ARPU, rising operating expenses, and strong liquidity despite acquisition outflows Results of Operations 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 quarter96 - The acquisition of Carbon6 in February 2025 added approximately 8,500 recurring revenue customers96 - Increases in operating expenses were primarily due to higher personnel-related costs from increased headcount across all departments to support business growth9192 Non-GAAP Financial Measures 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 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 acquisitions119121 - 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 repurchases119122 Quantitative and Qualitative Disclosures About Market Risk 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 quarter128 - 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 balances131 Controls and Procedures 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, 2025133 - 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 year135 PART II. OTHER INFORMATION Legal Proceedings The company is not currently subject to any material legal claims or actions - There are no material legal proceedings against the company138 Risk Factors 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 Report139 Unregistered Sales of Equity Securities and Use of Proceeds 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 2026141142 Other Information 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 This section lists exhibits filed with the Form 10-Q, including officer certifications and Interactive Data Files