CORRECTING and REPLACING “ SPS Commerce Reports Second Quarter 2024 Financial Results

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MINNEAPOLIS, July 25, 2024 (GLOBE NEWSWIRE) — In a release issued under the same headline on July 25, 2024 by SPS Commerce , Inc. (NASDAQ: NASDAQ:), please note that  the range of Non-GAAP income per diluted share numbers for  the Fiscal Year 2024 Guidance  have been corrected. The corrected release follows:

Company delivers 94th consecutive quarter of topline growth

Revenue and recurring revenue growth of 18% year-over-year

Announces new Share Repurchase Program

SPS Commerce, Inc. (NASDAQ: SPSC), a leader in retail supply chain cloud services, today announced financial results for the second quarter ended June  30, 2024.

Financial Highlights

Second Quarter 2024 Financial Highlights

  • Revenue was $153.6 million in the second quarter of 2024, compared to $130.4 million in the second quarter of 2023, reflecting 18% growth.
  • Recurring revenue grew 18% from the second quarter of 2023.
  • Net income was $18.0 million or $0.48 per diluted share, compared to net income of $14.7 million or $0.39 per diluted share in the second quarter of 2023.
  • Non-GAAP income per diluted share was $0.80, compared to non-GAAP income per diluted share of $0.69 in the second quarter of 2023.
  • Adjusted EBITDA for the second quarter of 2024 increased 16% to $44.2 million compared to the second quarter of 2023.
  • Share repurchases in the second quarter of 2024 totaled $17.5 million.

As the retail industry continues to evolve, SPS is uniquely positioned to help suppliers, large and small, digitize their trading partner connections to achieve efficiencies and scalability, said Chad Collins, CEO of SPS Commerce. The mission-critical nature of our solutions fuels consistent demand for our product portfolio, and we remain confident in the growth opportunity ahead of us as e-commerce and omnichannel retail continue to grow.

SPS Commerce delivered a strong second quarter performance and the 94th consecutive quarter of revenue growth, said Kim Nelson, CFO of SPS Commerce. Retail dynamics continue to play a key role in the expansion of our addressable markets, and we believe our balanced growth approach is the right strategy to consistently deliver on our near-term and long-term financial targets.

Share Repurchase Program

The Company also announced today that the Board of Directors of SPS Commerce authorized a new program to repurchase up to $100.0 million of common stock. Under the program, purchases may be made from time to time in the open market, in privately negotiated purchases, or both. The timing and number of shares to be purchased will be based on the price of the Company’s common stock, general business and market conditions and other investment considerations and factors. The share repurchase program becomes effective on August 23, 2024, and expires on July 24, 2026. The Company’s August 2022 program that previously authorized repurchase of up to $50.0 million terminates on July 26, 2024. The program does not obligate the Company to repurchase any specific number of shares and may be suspended or discontinued at any time without prior notice. The Company had 37.0 million shares of outstanding common stock as of June 30, 2024. The Company intends to finance the share repurchase program with cash on hand.

Guidance

Third Quarter 2024 Guidance

  • Revenue is expected to be in the range of $157.6 million to $158.6 million.
  • Net income per diluted share is expected to be in the range of $0.52 to $0.53, with fully diluted weighted average shares outstanding of 37.9 million shares.
  • Non-GAAP income per diluted share is expected to be in the range of $0.83 to $0.84.
  • Adjusted EBITDA is expected to be in the range of $46.9 million to $47.7 million.
  • Non-cash, share-based compensation expense is expected to be $11.6 million, depreciation expense is expected to be $4.7 million, and amortization expense is expected to be $5.0 million.

Fiscal Year 2024 Guidance

  • Revenue is expected to be in the range of $624.2 million to $626.0 million, representing 16% to 17% growth over 2023.
  • Net income per diluted share is expected to be in the range of $2.03 to $2.05, with fully diluted weighted average shares outstanding of 37.8 million shares.
  • Non-GAAP income per diluted share is expected to be in the range of $3.36 to $3.39.
  • Adjusted EBITDA is expected to be in the range of $185.5 to $187.0 million, representing 18% to 19% growth over 2023.
  • Non-cash, share-based compensation expense is expected to be $55.6 million, depreciation expense is expected to be $19.2 million, and amortization expense is expected to be $19.2 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 2024 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 120,000 companies in retail, grocery, distribution, supply, and logistics have chosen SPS as their retail network. SPS has achieved 94 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 condensed 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 condensed 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, and other adjustments as necessary for a fair presentation. Other adjustments included the expense impact from disposals of certain capitalized internally developed software. 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, including the expense impact from disposals of certain capitalized internally developed software, 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 2024, 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, 2023, 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
(in thousands, except shares)
 
  June 30,
2024
  December 31,
2023
ASSETS (unaudited)    
Current assets      
Cash and cash equivalents $ 240,232     $ 219,081  
Short-term investments   31,554       56,359  
Accounts receivable   59,355       50,160  
Allowance for credit losses   (3,958 )     (3,320 )
Accounts receivable, net   55,397       46,840  
Deferred costs   64,318       62,403  
Other assets   15,437       16,758  
Total current assets   406,938       401,441  
Property and equipment, net   35,083       36,043  
Operating lease right-of-use assets   7,076       7,862  
Goodwill   268,872       249,176  
Intangible assets, net   107,519       107,344  
Other assets      
Deferred costs, non-current   20,610       20,347  
Deferred income tax assets   7,347       505  
Other assets, non-current   1,076       1,126  
Total assets $ 854,521     $ 823,844  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities      
Accounts payable $ 5,877     $ 7,420  
Accrued compensation   32,236       41,588  
Accrued expenses   9,446       8,014  
Deferred revenue   76,393       69,187  
Operating lease liabilities   4,594       4,460  
Total current liabilities   128,546       130,669  
Other liabilities      
Deferred revenue, non-current   7,111       6,930  
Operating lease liabilities, non-current   7,751       9,569  
Deferred income tax liabilities   7,012       8,972  
Other liabilities, non-current   680       229  
Total liabilities   151,100       156,369  
Commitments and contingencies      
Stockholders’ equity      
Common stock   39       39  
Treasury stock   (162,187 )     (128,892 )
Additional paid-in capital   574,842       537,061  
Retained earnings   295,080       259,045  
Accumulated other comprehensive gain (loss)   (4,353 )     222  
Total stockholders’ equity   703,421       667,475  
Total liabilities and stockholders’ equity $ 854,521     $ 823,844  
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share amounts)
 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024     2023     2024     2023
Revenues $ 153,596   $ 130,416   $ 303,172   $ 256,284
Cost of revenues   52,018     44,544     103,505     87,508
Gross profit   101,578     85,872     199,667     168,776
Operating expenses              
Sales and marketing   35,691     30,349     72,123     59,433
Research and development   14,366     13,318     30,375     25,880
General and administrative   23,516     21,693     49,423     42,369
Amortization of intangible assets   4,840     3,479     9,178     7,330
Total operating expenses   78,413     68,839     161,099     135,012
Income from operations   23,165     17,033     38,568     33,764
Other income, net   4,056     1,882     7,188     3,157
Income before income taxes   27,221     18,915     45,756     36,921
Income tax expense   9,189     4,233     9,721     6,950
Net income $ 18,032   $ 14,682   $ 36,035   $ 29,971
               
Net income per share              
Basic $ 0.49   $ 0.40   $ 0.97   $ 0.82
Diluted $ 0.48   $ 0.39   $ 0.96   $ 0.80
               
Weighted average common shares used to compute net income per share              
Basic   37,078     36,593     37,063     36,511
Diluted   37,683     37,426     37,690     37,327
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
 
  Six Months Ended
June 30,
    2024       2023  
Cash flows from operating activities      
Net income $ 36,035     $ 29,971  
Reconciliation of net income to net cash provided by operating activities      
Deferred income taxes   (8,172 )     (8,654 )
Depreciation and amortization of property and equipment   9,377       9,289  
Amortization of intangible assets   9,178       7,330  
Provision for credit losses   3,646       2,491  
Stock-based compensation   31,512       24,661  
Other, net   (907 )     1,143  
Changes in assets and liabilities, net of effects of acquisitions      
Accounts receivable   (11,407 )     (9,937 )
Deferred costs   (1,996 )     (5,136 )
Other assets and liabilities   1,899       3,614  
Accounts payable   (1,450 )     (4,414 )
Accrued compensation   (10,763 )     (2,910 )
Accrued expenses   1,489       (728 )
Deferred revenue   5,965       9,909  
Operating leases   (900 )     (959 )
Net cash provided by operating activities   63,506       55,670  
Cash flows from investing activities      
Purchases of property and equipment   (8,592 )     (9,769 )
Purchases of investments   (78,994 )     (68,579 )
Maturities of investments   105,000       60,000  
Acquisition of businesses, net   (29,343 )      
Net cash used in investing activities   (11,929 )     (18,348 )
Cash flows from financing activities      
Repurchases of common stock   (37,483 )      
Net proceeds from exercise of options to purchase common stock   2,314       4,819  
Net proceeds from employee stock purchase plan activity   5,219       4,136  
Net cash provided by (used in) financing activities   (29,950 )     8,955  
Effect of foreign currency exchange rate changes   (476 )     94  
Net increase in cash and cash equivalents   21,151       46,371  
Cash and cash equivalents at beginning of period   219,081       162,893  
Cash and cash equivalents at end of period $ 240,232     $ 209,264  
SPS COMMERCE, INC.
NON-GAAP RECONCILIATION
(Unaudited; in thousands, except Margin, Adjusted EBITDA Margin, and per share amounts)
 
Adjusted EBITDA
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Net income $ 18,032     $ 14,682     $ 36,035     $ 29,971  
Income tax expense   9,189       4,233       9,721       6,950  
Depreciation and amortization of property and equipment   4,683       4,663       9,377       9,289  
Amortization of intangible assets   4,840       3,479       9,178       7,330  
Stock-based compensation expense   11,494       12,881       31,512       24,661  
Realized gain from foreign currency on cash and investments held   (1,255 )     (290 )     (1,559 )     (427 )
Investment income   (2,794 )     (1,611 )     (5,673 )     (2,737 )
Other         134             134  
Adjusted EBITDA $ 44,189     $ 38,171     $ 88,591     $ 75,171  
Adjusted EBITDA Margin
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Revenue $ 153,596     $ 130,416     $ 303,172     $ 256,284  
               
Net income   18,032       14,682       36,035       29,971  
Margin   12 %     11 %     12 %     12 %
               
Adjusted EBITDA   44,189       38,171       88,591       75,171  
Adjusted EBITDA Margin   29 %     29 %     29 %     29 %
Non-GAAP Income per Share
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2024       2023       2024       2023  
Net income $ 18,032     $ 14,682     $ 36,035     $ 29,971  
Stock-based compensation expense   11,494       12,881       31,512       24,661  
Amortization of intangible assets   4,840       3,479       9,178       7,330  
Realized gain from foreign currency on cash and investments held   (1,255 )     (290 )     (1,559 )     (427 )
Other         134             134  
Income tax effects of adjustments   (3,066 )     (5,199 )     (12,620 )     (11,108 )
Non-GAAP income $ 30,045     $ 25,687     $ 62,546     $ 50,561  
               
Shares used to compute net income and non-GAAP income per share              
Basic   37,078       36,593       37,063       36,511  
Diluted   37,683       37,426       37,690       37,327  
               
Net income per share, basic $ 0.49     $ 0.40     $ 0.97     $ 0.82  
Non-GAAP adjustments to net income per share, basic   0.32       0.30       0.72       0.56  
Non-GAAP income per share, basic $ 0.81     $ 0.70     $ 1.69     $ 1.38  
               
Net income per share, diluted $ 0.48     $ 0.39     $ 0.96     $ 0.80  
Non-GAAP adjustments to net income per share, diluted   0.32       0.30       0.70       0.55  
Non-GAAP income per share, diluted $ 0.80     $ 0.69     $ 1.66     $ 1.35  

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

Source: SPS Commerce, Inc.

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