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Sps Commerce (SPSC)
NASDAQ:SPSC
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SPS Commerce
(NASDAQ:SPSC)
71Outperform
Positive Factors
Acquisition
The acquisition is seen positively for the synergetic product elements as customers tend to use the invoice data within the core SPS fulfillment solution, creating an even more compelling combined solution.
Revenue Growth
SPS Commerce reported a solid fourth quarter, with total and recurring revenue growing 18% and 19%, respectively, approximately $2 million ahead of expectations.
Negative Factors
Customer Growth
Customer growth remains muted with management expecting more limited organic additions.
SPS Commerce (SPSC) vs. S&P 500 (SPY)
Market Cap
$4.89B
Dividend YieldN/A
Average Volume (3M)385.23K
Price to Earnings (P/E)63.6
Beta (1Y)1.41
Revenue Growth18.78%
EPS Growth15.01%
CountryUS
Employees2,783
SectorTechnology
Sector Strength53
IndustrySoftware
Share Statistics
EPS (TTM)2.03
Shares Outstanding37,773,838
10 Day Avg. Volume351,181
30 Day Avg. Volume385,230
Financial Highlights & Ratios
PEG Ratio4.24
Price to Book (P/B)N/A
Price to Sales (P/S)7.99
Price to Cash Flow (P/CF)22.90
P/FCF Ratio25.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$198.88Price Target Upside53.66% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
SPS Commerce Business Overview & Revenue Model
Company DescriptionSPS Commerce, Inc. (SPSC) is a leading provider of cloud-based supply chain management solutions, focusing on retail and wholesale sectors. The company offers an expansive network that connects businesses with their trading partners and streamlines operations. Its core services include electronic data interchange (EDI), order fulfillment, and retail performance analytics, designed to optimize supply chain efficiency and improve collaboration between retailers, suppliers, and logistics providers.
How the Company Makes MoneySPS Commerce generates revenue primarily through subscription fees for its cloud-based services, which include electronic data interchange (EDI) solutions, retail analytics, and other supply chain management tools. The company charges its customers, which consist of retailers, suppliers, distributors, and logistics companies, for access to its platform on a recurring basis. Additionally, SPS Commerce may earn revenue from professional services, such as implementation, training, and consulting, that help clients effectively utilize its solutions. Strategic partnerships and integrations with other technology providers and platforms also enhance the company's offerings and contribute to its revenue streams.
SPS Commerce Financial Statement Overview
Summary
SPS Commerce shows strong financial health with significant revenue growth of 18.78% and robust profitability metrics. The balance sheet is stable with low leverage, and cash flow generation remains strong, supporting business operations and growth initiatives.Income Statement
SPS Commerce has demonstrated strong revenue growth, with a notable increase from $536.91 million in 2023 to $637.77 million in 2024, a 18.78% growth rate. Gross profit margin remains strong at 66.94%, and net profit margin improved to 12.08%. The EBIT margin is steady at 13.93%, reflecting solid operational efficiency. The company maintains robust profitability metrics, indicating a good competitive position within the industry.85
Very Positive
Balance Sheet
The balance sheet of SPS Commerce is solid, characterized by a low debt-to-equity ratio of 0.01, indicating minimal leverage risk. The company exhibits a strong equity ratio of 82.87%, highlighting financial stability. Return on Equity (ROE) is impressive at 9.02%, reflecting efficient use of equity capital to generate profits. Overall, the balance sheet reflects a strong financial foundation with low leverage and high equity.90
Very Positive
Cash Flow
SPS Commerce shows a robust cash flow position, with a substantial operating cash flow of $157.40 million in 2024. Free cash flow grew by 22.03% from 2023 to 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 2.04, demonstrating efficient conversion of income to cash. The company's cash flow statement reflects healthy liquidity and strong cash management practices.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 637.76M | 536.91M | 450.88M | 385.28M | 312.63M | Gross Profit |
| 427.05M | 354.84M | 297.81M | 253.60M | 212.79M | EBIT |
| 88.88M | 77.25M | 71.18M | 55.09M | 50.16M | EBITDA |
| 88.88M | 112.00M | 99.37M | 80.00M | 68.82M | Net Income Common Stockholders |
| 77.05M | 65.82M | 55.13M | 44.60M | 45.59M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 241.02M | 275.44M | 214.31M | 257.31M | 187.48M | Total Assets |
| 1.03B | 823.84M | 672.91M | 615.85M | 525.52M | Total Debt |
| 12.47M | 14.03M | 17.29M | 20.53M | 22.47M | Net Debt |
| -228.55M | -205.05M | -145.61M | -187.02M | -127.22M | Total Liabilities |
| 176.54M | 156.37M | 135.84M | 131.59M | 104.80M | Stockholders Equity |
| 854.69M | 667.48M | 537.07M | 484.26M | 420.72M |
| Cash Flow | Free Cash Flow | |||
| 137.35M | 112.54M | 80.17M | 93.31M | 72.09M | Operating Cash Flow |
| 157.40M | 132.30M | 100.05M | 112.89M | 88.56M | Investing Cash Flow |
| -110.45M | -92.64M | -112.79M | -46.70M | -120.47M | Financing Cash Flow |
| -23.03M | 15.97M | -31.63M | -8.36M | 2.33M |
SPS Commerce Technical Analysis
Negative
129.43
Price Trends
163.27
Negative
174.72
Negative
184.17
Negative
Market Momentum
-10.86
Negative
30.83
Neutral
29.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPSC, the sentiment is Negative. The current price of 129.43 is below the 20-day moving average (MA) of 134.59, below the 50-day MA of 163.27, and below the 200-day MA of 184.17, indicating a bearish trend. The MACD of -10.86 indicates Negative momentum. The RSI at 30.83 is Neutral, neither overbought nor oversold. The STOCH value of 29.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SPSC.
SPS Commerce Risk Analysis
SPS Commerce disclosed 28 risk factors in its most recent earnings report. SPS Commerce reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
SPS Commerce Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $171.67B | 25.99 | 47.28% | ― | 10.65% | 44.84% | |
73 Outperform | $30.42B | 16.56 | 34.29% | 1.65% | 2.79% | -23.30% | |
72 Outperform | $10.54B | 49.09 | 75.64% | ― | 12.23% | 24.66% | |
71 Outperform | $4.89B | 63.63 | 10.12% | ― | 18.78% | 15.01% | |
70 Outperform | $176.52B | 63.16 | 19.58% | ― | 27.85% | 1400.97% | |
67 Neutral | $418.59B | 35.07 | 108.79% | 1.07% | 6.23% | 12.37% | |
58 Neutral | $21.86B | 10.22 | -18.46% | 2.37% | 4.89% | -23.24% |
* Technology Sector Average
Performance Comparison
SPSC
SPS Commerce
129.43
-49.33
-27.60%
ADBE
Adobe
394.74
-119.12
-23.18%
EBAY
Ebay Inc
65.28
14.87
29.50%
MANH
Manhattan Associates
172.50
-74.50
-30.16%
ORCL
Oracle
149.27
22.84
18.07%
TSE:SHOP
Shopify Inc.
136.33
31.40
29.92%
SPS Commerce Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: -26.95% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call indicates a strong performance by SPS Commerce in 2024, with significant revenue growth, strategic acquisitions, and successful customer partnerships. The company has identified a substantial global market opportunity and projects continued growth in revenue and EBITDA for 2025. However, there are some concerns about the moderation in analytics growth and potential impacts from international tariffs.Highlights
Strong Revenue Growth
For the full year 2024, revenue grew 19% to $637.8 million, with recurring revenue increasing by 20%.
Strategic Acquisitions
SPS Commerce expanded its product portfolio with the acquisitions of Vision33's SAP Business One integration technology, Traverse Systems, SupplyPike, and Carbon6, strengthening its network and market position.
Customer Success Stories
Successful partnerships with major clients like Canadian Tire and GNC, resulting in improved supply chain operations and compliance rates.
Global Market Opportunity
SPS Commerce identified a total addressable market of $11.1 billion globally, with $6.5 billion in the U.S.
Positive Financial Outlook
Projected revenue growth for 2025 is between 19% to 20%, with adjusted EBITDA expected to grow by 22% to 24%.
Lowlights
Moderation in Analytics Growth
Analytics growth slowed to 8%, down from 10% in previous years, partly due to macroeconomic factors affecting customer buying behavior.
Potential Impact of International Tariffs
Uncertainty around international tariffs could affect the need for digital connections and possibly impact customer connections with international exposure.
Company Guidance
During the SPS Commerce Q4 2024 earnings call, the company provided guidance for the first quarter and full year 2025. For Q1 2025, SPS Commerce expects revenue to range between $178.5 million and $180 million, indicating a year-over-year growth of approximately 19% to 20%. Adjusted EBITDA is projected to be between $49.5 million and $50.5 million, while fully diluted earnings per share are expected to be in the range of $0.39 to $0.41. For the full year 2025, SPS Commerce anticipates revenue between $758 million and $763 million, with a growth rate of about 19% to 20% over 2024, and adjusted EBITDA ranging from $227.5 million to $231 million, representing growth of approximately 22% to 24%. The company also expects non-GAAP diluted income per share to be between $3.78 and $3.84, with significant expenses in stock-based compensation ($63 million), depreciation ($23.5 million), and amortization ($39.8 million).SPS Commerce Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
SPS Commerce Appoints Razat Gaurav to Board
Neutral
Feb 26, 2025
On February 25, 2025, SPS Commerce’s Board of Directors expanded from seven to eight members, appointing Razat Gaurav as an independent director effective March 6, 2025. This strategic move comes as James Ramsey, a long-serving board member since 2014, announced his retirement and decision not to seek re-election at the 2025 annual meeting. Gaurav’s appointment and Ramsey’s retirement are part of the company’s ongoing efforts to strengthen its governance and strategic direction.
M&A Transactions
SPS Commerce Expands with Carbon6 Technologies Acquisition
Neutral
Jan 2, 2025
SPS Commerce has entered into a merger agreement to acquire Carbon6 Technologies for approximately $210 million, combining cash and share considerations. The acquisition, aimed at enhancing SPS Commerce’s market position, involves issuing common stock to Carbon6 shareholders and includes regulatory conditions and lock-up agreements for stock transactions post-closing.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.