• SPS Commerce Reports Second Quarter 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 27 Jul 2023 15:05:01   America/Chicago

    Company delivers 90th consecutive quarter of topline growth
    Revenue growth of 19% year-over-year; Recurring revenue growth of 20% year-over-year

    MINNEAPOLIS, July 27, 2023 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the second quarter ended June 30, 2023.

    Second Quarter 2023 Financial Highlights

    • Revenue was $130.4 million in the second quarter of 2023, compared to $109.2 million in the second quarter of 2022, reflecting 19% growth.
    • Recurring revenue grew 20% from the second quarter of 2022.
    • Net income was $14.7 million or $0.39 per diluted share, compared to net income of $10.8 million or $0.29 per diluted share in the second quarter of 2022.
    • Non-GAAP income per diluted share was $0.69, compared to non-GAAP income per diluted share of $0.53 in the second quarter of 2022.
    • Adjusted EBITDA for the second quarter of 2023 increased 24% to $38.2 million compared to the second quarter of 2022.

    “Retailers and suppliers are investing in new technologies to revitalize their supply chain and SPS Commerce remains committed to delivering the world-class products and excellent customer experience suppliers have come to expect from us,” said Archie Black, CEO of SPS Commerce.   “SPS is the world’s largest cloud retail network and as we continue to leverage its data and enhance its intelligence, we make joining and operating within the network increasingly more efficient, further expanding our competitive advantage.”

    “Ongoing investments across the retail industry continue to present tremendous opportunities for SPS,” said Kim Nelson, CFO of SPS Commerce.   “With the only full-service EDI solution, we are well positioned to help our customers optimize their network as we capitalize on a multi-billion dollar addressable market to deliver sustained, profitable growth.”

    Guidance

    SPS Commerce third quarter and full year 2023 guidance does not include the pending acquisition of TIE Kinetix, which was announced in a separate press release issued July 26, 2023.

    Third Quarter 2023 Guidance

    • Revenue is expected to be in the range of $133.6 million to $134.4 million.
    • Net income per diluted share is expected to be in the range of $0.37 to $0.38, with fully diluted weighted average shares outstanding of 37.6 million shares.
    • Non-GAAP income per diluted share is expected to be in the range of $0.65 to $0.67.
    • Adjusted EBITDA is expected to be in the range of $39.3 million to $40.0 million.
    • Non-cash, share-based compensation expense is expected to be $11.7 million, depreciation expense is expected to be $4.9 million, and amortization expense is expected to be $3.7 million.

    Full Year 2023 Guidance

    • Revenue is expected to be in the range of $528.5 million to $530.0 million, representing 17% to 18% growth over 2022.
    • Net income per diluted share is expected to be in the range of $1.60 to $1.63, with fully diluted weighted average shares outstanding of 37.4 million shares.
    • Non-GAAP income per diluted share is expected to be in the range of $2.69 to $2.72.
    • Adjusted EBITDA is expected to be in the range of $155.8 to $156.9 million, representing 18% to 19% growth over 2022.
    • Non-cash, share-based compensation expense is expected to be $46.2 million, depreciation expense is expected to be $19.4 million, and amortization expense is expected to be $14.7 million.

    The forward-looking measures and the underlying assumptions involve significant known and unknown risks and uncertainties, and actual results may vary materially. The Company does not present a reconciliation of the forward-looking non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, and non-GAAP income per share, to the most directly comparable GAAP financial measures because it is impractical to forecast certain items without unreasonable efforts due to the uncertainty and inherent difficulty of predicting, within a reasonable range, the occurrence and financial impact of and the periods in which such items may be recognized.

    Quarterly Conference Call

    To access the call, please dial 1-833-816-1382, or outside the U.S. 1-412-317-0475 at least 15 minutes prior to the 3:30 p.m. CT start time. Please ask to join the SPS Commerce Q2 2023 conference call. A live webcast of the call will also be available at http://investors.spscommerce.com under the Events and Presentations menu.   The replay will also be available on our website at http://investors.spscommerce.com.

    About SPS Commerce

    SPS Commerce is the world’s leading retail network, connecting trading partners around the globe to optimize supply chain operations for all retail partners. We support data-driven partnerships with innovative cloud technology, customer-obsessed service and accessible experts so our customers can focus on what they do best. To date, more than 115,000 companies in retail, distribution, grocery and e-commerce have chosen SPS as their retail network. SPS has achieved 90 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, contact SPS at 866-245-8100 or visit www.spscommerce.com.

    SPS COMMERCE, SPS, SPS logo and INFINITE RETAIL POWER are marks of SPS Commerce, Inc. and registered in the U.S. Patent and Trademark Office, along with other SPS marks. Such marks may also be registered or otherwise protected in other countries. 

    SPS-F

    Use of Non-GAAP Financial Measures

    To supplement our consolidated financial statements, we provide investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income per share, all of which are non-GAAP financial measures. We believe that these non-GAAP financial measures provide useful information to our management, Board of Directors, and investors regarding certain financial and business trends relating to our financial condition and results of operations.

    Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation. We believe these non-GAAP financial measures are useful to an investor as they are widely used in evaluating operating performance. Adjusted EBITDA and Adjusted EBITDA Margin are used to measure operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of capital structure and the method by which assets were acquired.

    These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in our consolidated financial statements and are subject to inherent limitations. Investors should review the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release.

    Adjusted EBITDA Measures:

    Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain or loss from foreign currency on cash and investments held, investment income or loss, and other adjustments as necessary for a fair presentation. Net income is the comparable GAAP measure of financial performance.

    Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.

    Non-GAAP Income Per Share Measure:

    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 foreign currency on cash and investments held, other adjustments as necessary for a fair presentation, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period.

    To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

    Forward-Looking Statements

    This press release may contain forward-looking statements, including information about management's view of SPS Commerce's future expectations, plans and prospects, including our views regarding future execution within our business, the opportunity we see in the retail supply chain world and our performance for the third quarter and full year of 2023, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause the results of SPS Commerce to be materially different than those expressed or implied in such statements. Certain of these risk factors and others are included in documents SPS Commerce files with the Securities and Exchange Commission, including but not limited to, SPS Commerce's Annual Report on Form 10-K for the year ended December 31, 2022, as well as subsequent reports filed with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on SPS Commerce's future results. The forward-looking statements included in this press release are made only as of the date hereof. SPS Commerce cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, SPS Commerce expressly disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

    SPS COMMERCE, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited; in thousands, except shares)
     
     June 30,
    2023
     December 31,
    2022
    ASSETS   
    Current assets   
    Cash and cash equivalents$209,264  $162,893 
    Short-term investments 60,914   51,412 
    Accounts receivable 48,092   42,501 
    Allowance for credit losses (3,100)  (3,066)
    Accounts receivable, net 44,992   39,435 
    Deferred costs 56,250   52,755 
    Other assets 13,556   16,319 
    Total current assets 384,976   322,814 
    Property and equipment, net 35,211   35,458 
    Operating lease right-of-use assets 7,973   9,170 
    Goodwill 202,786   197,284 
    Intangible assets, net 77,633   88,352 
    Other assets   
    Deferred costs, non-current 19,005   17,424 
    Deferred income tax assets 6,676   227 
    Other assets, non-current 1,278   2,185 
    Total assets$735,538  $672,914 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities   
    Accounts payable$6,163  $11,256 
    Accrued compensation 28,637   30,235 
    Accrued expenses 6,714   7,451 
    Deferred revenue 66,381   57,423 
    Operating lease liabilities 4,073   4,277 
    Total current liabilities 111,968   110,642 
    Other liabilities   
    Deferred revenue, non-current 5,724   4,771 
    Operating lease liabilities, non-current 11,058   13,009 
    Deferred income tax liabilities 5,807   7,419 
    Total liabilities 134,557   135,841 
    Commitments and contingencies   
    Stockholders' equity   
    Common stock 39   38 
    Treasury Stock (128,892)  (128,892)
    Additional paid-in capital 508,484   476,117 
    Retained earnings 223,192   193,221 
    Accumulated other comprehensive loss (1,842)  (3,411)
    Total stockholders’ equity 600,981   537,073 
    Total liabilities and stockholders’ equity$735,538  $672,914 
            


    SPS COMMERCE, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (Unaudited; in thousands, except per share amounts)
     
     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
     2023 2022 2023 2022
    Revenues$130,416 $109,178  $256,284 $214,371 
    Cost of revenues 44,544  37,530   87,508  72,919 
    Gross profit 85,872  71,648   168,776  141,452 
    Operating expenses       
    Sales and marketing 30,349  24,582   59,433  49,237 
    Research and development 13,318  11,432   25,880  22,133 
    General and administrative 21,693  17,198   42,369  32,666 
    Amortization of intangible assets 3,479  2,468   7,330  4,938 
    Total operating expenses 68,839  55,680   135,012  108,974 
    Income from operations 17,033  15,968   33,764  32,478 
    Other income (expense), net 1,882  (1,338)  3,157  (915)
    Income before income taxes 18,915  14,630   36,921  31,563 
    Income tax expense 4,233  3,877   6,950  8,207 
    Net income$14,682 $10,753  $29,971 $23,356 
            
    Net income per share       
    Basic$0.40 $0.30  $0.82 $0.65 
    Diluted$0.39 $0.29  $0.80 $0.63 
            
    Weighted average common shares used to compute net income per share       
    Basic 36,593  36,085   36,511  36,110 
    Diluted 37,426  36,862   37,327  36,897 


    SPS COMMERCE, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited; in thousands)
      
     Six Months Ended
    June 30,
      2023   2022 
    Cash flows from operating activities   
    Net income$29,971  $23,356 
    Reconciliation of net income to net cash provided by operating activities   
    Deferred income taxes (8,654)  (2,160)
    Depreciation and amortization of property and equipment 9,289   7,814 
    Amortization of intangible assets 7,330   4,938 
    Provision for credit losses 2,491   2,634 
    Stock-based compensation 24,661   17,676 
    Other, net 1,143   8 
    Changes in assets and liabilities   
    Accounts receivable (9,937)  (7,862)
    Deferred costs (5,136)  (5,095)
    Other current and non-current assets 3,612   (1,423)
    Accounts payable (4,414)  (3,234)
    Accrued compensation (2,910)  (7,186)
    Accrued expenses (728)  (805)
    Deferred revenue 9,909   8,802 
    Operating leases (959)  (678)
    Net cash provided by operating activities 55,669   36,785 
    Cash flows from investing activities   
    Purchases of property and equipment (9,769)  (8,191)
    Purchases of investments (68,579)  (114,603)
    Maturities of investments 60,000   117,500 
    Net cash used in investing activities (18,348)  (5,294)
    Cash flows from financing activities   
    Repurchases of common stock    (30,223)
    Net proceeds from exercise of options to purchase common stock 4,819   690 
    Net proceeds from employee stock purchase plan activity 4,136   3,350 
    Net cash provided by (used in) financing activities 8,956   (26,183)
    Effect of foreign currency exchange rate changes 94   (135)
    Net increase in cash and cash equivalents 46,371   5,173 
    Cash and cash equivalents at beginning of period 162,893   207,552 
    Cash and cash equivalents at end of period$209,264  $212,725 
            

     

    SPS COMMERCE, INC.
    NON-GAAP RECONCILIATION
    (Unaudited; in thousands, except per share amounts)
     
    Adjusted EBITDA
     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
      2023   2022   2023   2022 
    Net income$14,682  $10,753  $29,971  $23,356 
    Income tax expense 4,233   3,877   6,950   8,207 
    Depreciation and amortization of property and equipment 4,663   3,950   9,289   7,814 
    Amortization of intangible assets 3,479   2,468   7,330   4,938 
    Stock-based compensation expense 12,881   8,661   24,661   17,676 
    Realized (gain) loss from foreign currency on cash and investments held (290)  1,327   (427)  859 
    Investment income (1,611)  (172)  (2,737)  (220)
    Other 134      134    
    Adjusted EBITDA$38,171  $30,864  $75,171  $62,630 

     

    Adjusted EBITDA Margin
     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
      2023   2022   2023   2022 
    Revenue$130,416  $109,178  $256,284  $214,371 
            
    Net income 14,682   10,753   29,971   23,356 
    Margin 11%  10%  12%  11%
            
    Adjusted EBITDA 38,171   30,864   75,171   62,630 
    Adjusted EBITDA Margin 29%  28%  29%  29%

     

    Non-GAAP Income per Share
     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
      2023   2022   2023   2022 
    Net income$14,682  $10,753  $29,971  $23,356 
    Stock-based compensation expense 12,881   8,661   24,661   17,676 
    Amortization of intangible assets 3,479   2,468   7,330   4,938 
    Realized (gain) loss from foreign currency on cash and investments held (290)  1,327   (427)  859 
    Other 134      134    
    Income tax effects of adjustments (5,199)  (3,491)  (11,108)  (6,710)
    Non-GAAP income$25,687  $19,718  $50,561  $40,119 
            
    Shares used to compute net income and non-GAAP income per share       
    Basic 36,593   36,085   36,511   36,110 
    Diluted 37,426   36,862   37,327   36,897 
            
    Net income per share, basic$0.40  $0.30  $0.82  $0.65 
    Non-GAAP adjustments to net income per share, basic 0.30   0.25   0.56   0.46 
    Non-GAAP income per share, basic$0.70  $0.55  $1.38  $1.11 
            
    Net income per share, diluted$0.39  $0.29  $0.80  $0.63 
    Non-GAAP adjustments to net income per share, diluted 0.30   0.24   0.55   0.46 
    Non-GAAP income per share, diluted$0.69  $0.53  $1.35  $1.09 
            

    Contact:
    Investor Relations
    The Blueshirt Group
    Irmina Blaszczyk & Lisa Laukkanen
    SPSC@blueshirtgroup.com
    415-217-4962


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