SPS(US:SPSC)2025-10-30 21:30Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $189.9 million, representing a 16% increase year-over-year, marking the 99th consecutive quarter of revenue growth [12] - Recurring revenue grew 18% year-over-year, with approximately 54,950 recurring revenue customers, an increase of 450 from the previous quarter [12] - Adjusted EBITDA increased 25% to $60.5 million compared to $48.4 million in Q3 of the previous year [12] - Total cash and investments at the end of the quarter were $134 million, with a share repurchase of $30 million [12] Business Line Data and Key Metrics Changes - The fulfillment business grew 20% year-over-year, while revenue recovery was approximately $3 million below expectations due to seasonality and changes in Amazon's inventory policy [4][5] - The company completed its combined go-to-market strategy ahead of schedule, positioning itself to unlock the potential of the revenue recovery product category [5] Market Data and Key Metrics Changes - The company reported a net increase of 450 customers in Q3, driven by strong retail relationship management programs [4] - The revenue recovery business represents a $750 million addressable market across 1P U.S. sellers, indicating significant cross-selling opportunities [5] Company Strategy and Development Direction - SPS Commerce aims to capitalize on long-term growth opportunities driven by an evolving retail ecosystem, with strategic acquisitions made over the past two years to expand its product portfolio [6][7] - The company is focused on enhancing trading partner collaboration to improve supply chain efficiencies, positioning itself as the industry's most broadly adopted retail cloud services platform [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic uncertainty and spend scrutiny affecting customer groups, but remains optimistic about the evolving retail ecosystem driving supply chain efficiencies [9] - For Q4 2025, the company expects revenue in the range of $192.7 million to $194.7 million, representing approximately 13% to 14% year-over-year growth [14] Other Important Information - Dan Juknis, the Chief Revenue Officer, will retire at the end of the year, with Eduardo Rossini joining as Chief Commercial Officer to enhance customer relationships and lifecycle management [10][11] Q&A Session Summary Question: Insights on revenue recovery seasonality and impact on fiscal 2026 guidance - Management noted that visibility on shipment volumes into Amazon warehouses became apparent late in Q3, leading to lower-than-expected revenue recovery [20] - The impact of revenue recovery on Q4 guidance was similar to Q3, with ongoing invoice scrutiny and delayed purchases also affecting revenue [21][22] Question: Expectations for the new Chief Commercial Officer - The new CCO is expected to refine the go-to-market strategy and enhance cross-selling opportunities, leveraging his experience with mid-market ERPs [24][25] Question: Impact of invoice scrutiny on customer spending - Management indicated that spend scrutiny is primarily driven by suppliers absorbing costs and seeking cost savings, affecting customer sentiment [44] Question: Performance comparison between SupplyPike and Carbon6 - Management expressed confidence in the long-term potential of the revenue recovery opportunity, with strong interest from fulfillment customers [46] Question: Initial guidance for 2026 and macro environment assumptions - The initial guidance reflects current dynamics, with optimism for business opportunities in 2026 despite challenges faced in 2025 [50] Question: Customer acquisition and churn rates - The company reported a net increase of 1,100 customers in the first three quarters, with expectations for flat to slightly down net customer adds in Q4 due to timing [58]