Should You Hold SPS Commerce (SPSC)?

Core Insights - Conestoga Capital Advisors reported that equity markets reached new all-time highs in Q3 2025, but their Small Cap Composite underperformed the Russell 2000 Growth Index, returning -1.4% compared to the Index's 12.2% gain [1] - The gains in the Index were primarily driven by low-quality stocks, particularly unprofitable, high-beta names [1] Company Overview: SPS Commerce, Inc. - SPS Commerce, Inc. provides cloud-based supply chain management solutions and reported a one-month return of 1.74%, but its shares have decreased by 43.44% over the past 52 weeks [2] - As of October 17, 2025, SPS Commerce's stock closed at $109.05, with a market capitalization of $4.134 billion [2] Financial Performance and Outlook - In Q2 2025, SPS Commerce's revenue grew by 22% to $187.4 million, exceeding expectations [4] - Management provided medium-term guidance of "at least" high-single digit revenue growth and margin expansion annually, which surprised some investors [3] - An investor day was held to emphasize the durability of growth and a larger addressable market, but investors are still cautious about the execution and pace of revenue growth [3] Hedge Fund Interest - At the end of Q2 2025, 34 hedge fund portfolios held SPS Commerce, an increase from 31 in the previous quarter [4] - Despite the potential of SPS Commerce as an investment, some analysts believe that certain AI stocks may offer greater upside potential with less downside risk [4]