SPS(SPSC) - 2025 Q2 - Quarterly Results

Company Overview & Q2 2025 Performance 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 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] Management Commentary 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] - The product portfolio enables stronger collaboration between trading partners, unlocking greater efficiency, cost savings, and shared success, positioning SPS for long-term growth[3] - 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] About SPS Commerce 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] - The company supports over 50,000 recurring revenue customers in retail, grocery, distribution, supply, manufacturing, and logistics[9] - SPS Commerce has achieved 98 consecutive quarters of revenue growth[9] Financial Guidance 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 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 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 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 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] - Management uses these non-GAAP measures for performance comparison, trend analyses, planning purposes, and determining executive and senior management incentive compensation[13] - 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] Definitions of Non-GAAP Measures 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] - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue[16] - 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] Condensed Consolidated Financial Statements 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 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 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] Condensed Consolidated Statements of Cash Flows 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] - Repurchases of common stock increased to $(59,558) thousand in H1 2025 from $(37,483) thousand in H1 2024[24] Non-GAAP Reconciliations 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 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 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 This section provides details on the quarterly conference call and includes important disclaimers regarding forward-looking statements Quarterly Conference Call 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] - To access the call, dial 1-833-816-1382 (U.S.) or 1-412-317-0475 (outside U.S.)[8] - A live webcast and replay will be available at http://investors.spscommerce.com under the Events and Presentations menu[8] Forward-Looking Statements 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] - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[18] - SPS Commerce expressly disclaims any intent or obligation to update or revise any forward-looking statements[18]