SPS Commerce Reports First Quarter 2025 Financial Results

Rhea-AI Summary

SPS Commerce (NASDAQ: SPSC) reported strong Q1 2025 financial results, marking its 97th consecutive quarter of revenue growth. Revenue increased 21% to $181.5 million, while recurring revenue grew 23% compared to Q1 2024. The company achieved net income of $22.2 million ($0.58 per diluted share) and Adjusted EBITDA of $54.4 million, up 22% year-over-year.

For FY2025, SPS Commerce projects revenue between $758.5-763.0 million (19-20% growth) and expects Adjusted EBITDA of $229.4-232.9 million. The company maintains a strong market position with over 50,000 recurring revenue customers across retail, grocery, distribution, and manufacturing sectors, addressing an $11 billion total addressable market.

Positive

• 97th consecutive quarter of revenue growth
• 21% revenue growth to $181.5M in Q1 2025
• 23% recurring revenue growth year-over-year
• 22% increase in Adjusted EBITDA to $54.4M
• Net income increased to $22.2M from $18.0M YoY
• Strong guidance projecting 19-20% revenue growth for FY2025

Negative

• Share repurchases of $40.0M reducing cash position
• Operating expenses increased by 19.3% to $98.7M
• Allowance for credit losses increased to $4.8M from $4.2M

Insights

Financial Analyst

SPS Commerce delivered impressive Q1 results with 21% revenue growth and 97 consecutive quarters of growth, signaling sustainable competitive advantage.

SPS Commerce's Q1 2025 results demonstrate exceptional performance with 21% revenue growth reaching $181.5 million and an even stronger 23% increase in recurring revenue. This marks their 97th consecutive quarter of revenue growth—an extraordinary feat that few public companies can claim, showcasing the durability of their business model in the retail supply chain space.

The bottom line shows equally compelling momentum with net income increasing to $22.2 million ($0.58 per diluted share) from $18.0 million ($0.48 per diluted share) year-over-year. Non-GAAP EPS grew 16% to $1.00, while Adjusted EBITDA increased 22% to $54.4 million, indicating robust operational efficiency.

Management's confidence is evident in their strong forward guidance, projecting full-year revenue of $758.5-763.0 million (19-20% growth) and Adjusted EBITDA growth of 23-25%. This disproportionate profit growth versus revenue suggests continued margin expansion and operating leverage.

The $40 million in share repurchases during Q1 signals management's conviction in their valuation and commitment to returning capital to shareholders. With an addressable market of $11 billion as noted by CEO Chad Collins, and a current network exceeding 50,000 organizations, SPS Commerce has penetrated only a fraction of its potential market.

Their consistent performance through varying economic cycles—including the current "uncertain macro environment" mentioned by CFO Kim Nelson—demonstrates the mission-critical nature of their solutions for the retail supply chain ecosystem. This consistent execution positions SPS Commerce as a reliable growth company with an established competitive moat in retail supply chain technology.

Company delivers 97th consecutive quarter of topline growth
First quarter 2025 revenue grew 21% and recurring revenue grew 23% from the first quarter of 2024

MINNEAPOLIS, April 24, 2025 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (NASDAQ: SPSC), a leader in retail supply chain cloud services, today announced financial results for the first quarter ended March 31, 2025.

Financial Highlights

First Quarter 2025 Financial Highlights

• Revenue was $181.5 million in the first quarter of 2025, compared to $149.6 million in the first quarter of 2024, reflecting 21% growth.
• Recurring revenue grew 23% from the first quarter of 2024.
• Net income was $22.2 million or $0.58 per diluted share, compared to net income of $18.0 million or $0.48 per diluted share in the first quarter of 2024.
• Non-GAAP income per diluted share was $1.00, compared to non-GAAP income per diluted share of $0.86 in the first quarter of 2024.
• Adjusted EBITDA for the first quarter of 2025 increased 22% to $54.4 million compared to the first quarter of 2024.
• Share repurchases in the first quarter of 2025 totaled $40.0 million.

“SPS Commerce operates a network of over 50,000 suppliers, logistics companies and buying organizations across retail, distribution, grocery, and manufacturing, and we are uniquely positioned to support all trading relationships,” said Chad Collins, CEO of SPS Commerce.  “With an $11 billion total addressable market, we have a tremendous opportunity to transform how trading partners work together as they continue to advance their supply chain technologies.” 

“We delivered strong first-quarter performance, and the 97th consecutive quarter of revenue growth,” said Kim Nelson, CFO of SPS Commerce.  “Despite ongoing uncertainty in the macro environment, we remain confident in our full-year 2025 growth outlook and margin expansion profile, which underscores the resilience of our business model and the mission critical nature of our solutions, designed to improve collaboration across the global retail supply chain.”

Guidance

Second Quarter 2025 Guidance

• Revenue is expected to be in the range of $184.5 million to $186.2 million, representing 20% to 21% year-over-year growth.  
• Net income per diluted share is expected to be in the range of $0.41 to $0.44, with fully diluted weighted average shares outstanding of 38.8 million shares.
• Non-GAAP income per diluted share is expected to be in the range of $0.87 to $0.90.
• Adjusted EBITDA is expected to be in the range of $53.0 million to $54.5 million.
• Non-cash, share-based compensation expense is expected to be $15.5 million, depreciation expense is expected to be $5.5 million, and amortization expense is expected to be $9.8 million.

Fiscal Year 2025 Guidance

• Revenue is expected to be in the range of $758.5 million to $763.0 million, representing 19% to 20% growth over 2024.
• Net income per diluted share is expected to be in the range of $2.06 to $2.13, with fully diluted weighted average shares outstanding of 38.7 million shares.
• Non-GAAP income per diluted share is expected to be in the range of $3.86 to $3.93.
• Adjusted EBITDA is expected to be in the range of $229.4 million to $232.9 million, representing 23% to 25% growth over 2024.
• Non-cash, share-based compensation expense is expected to be $61.4 million, depreciation expense is expected to be $23.0 million, and amortization expense is expected to be $38.0 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 Q1 2025 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. Over 50,000 recurring revenue customers in retail, grocery, distribution, supply, manufacturing, and logistics are using SPS as their retail network. SPS has achieved 97 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 investments held and foreign currency impact on cash and investments, investment income, and other adjustments as necessary for a fair presentation. Other adjustments for the three months ended March 31, 2025 included the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs. 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 investments held and foreign currency impact on cash and investments, other adjustments as necessary for a fair presentation, including for the three months ended March 31, 2025 the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs, 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 second quarter and full year of 2025, 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, 2024, 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)
	March 31, 2025				December 31, 2024
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	94,921			$	241,017
Accounts receivable		68,183				56,214
Allowance for credit losses		(4,793	)			(4,179	)
Accounts receivable, net		63,390				52,035
Deferred costs		67,107				65,342
Other assets		26,417				23,513
Total current assets		251,835				381,907
Property and equipment, net		38,687				37,547
Operating lease right-of-use assets		8,424				8,192
Goodwill		533,940				399,180
Intangible assets, net		252,280				181,294
Other assets
Deferred costs, non-current		21,416				20,572
Deferred income tax assets		562				505
Other assets, non-current		1,906				2,033
Total assets	$	1,109,050			$	1,031,230
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	11,255			$	8,577
Accrued compensation		40,747				47,160
Accrued expenses		16,640				12,108
Deferred revenue		78,620				74,256
Operating lease liabilities		6,162				4,583
Total current liabilities		153,424				146,684
Other liabilities
Deferred revenue, non-current		5,748				6,189
Operating lease liabilities, non-current		6,101				7,885
Deferred income tax liabilities		20,298				15,541
Other liabilities, non-current		2,558				241
Total liabilities		188,129				176,540
Commitments and contingencies
Stockholders' equity
Common stock		40				40
Treasury stock		(102,096	)			(99,748	)
Additional paid-in capital		672,138				627,982
Retained earnings		358,295				336,099
Accumulated other comprehensive loss		(7,456	)			(9,683	)
Total stockholders’ equity		920,921				854,690
Total liabilities and stockholders’ equity	$	1,109,050			$	1,031,230

SPS COMMERCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited; in thousands, except per share amounts)
	Three Months Ended March 31,
	2025			2024
Revenues	$	181,549		$	149,576
Cost of revenues		56,914			51,487
Gross profit		124,635			98,089
Operating expenses
Sales and marketing		41,634			36,432
Research and development		17,439			16,009
General and administrative		31,018			25,907
Amortization of intangible assets		8,588			4,338
Total operating expenses		98,679			82,686
Income from operations		25,956			15,403
Other income, net		2,207			3,132
Income before income taxes		28,163			18,535
Income tax expense		5,967			532
Net income	$	22,196		$	18,003
Net income per share
Basic	$	0.58		$	0.49
Diluted	$	0.58		$	0.48
Weighted average common shares used to compute net income per share
Basic		37,990			37,049
Diluted		38,163			37,686

SPS COMMERCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in thousands)
	Three Months Ended March 31,
	2025				2024
Cash flows from operating activities
Net income	$	22,196			$	18,003
Reconciliation of net income to net cash provided by operating activities
Deferred income taxes		(4,418	)			(7,070	)
Depreciation and amortization of property and equipment		4,957				4,694
Amortization of intangible assets		8,588				4,338
Provision for credit losses		1,822				1,408
Stock-based compensation		13,867				20,018
Other, net		168				(431	)
Changes in assets and liabilities, net of effects of acquisition
Accounts receivable		(7,443	)			(6,759	)
Deferred costs		(1,247	)			(1,651	)
Other assets and liabilities		1,174				3,030
Accounts payable		1,677				5,098
Accrued compensation		(7,948	)			(9,518	)
Accrued expenses		3,868				(674	)
Deferred revenue		3,160				4,129
Operating leases		(438	)			(551	)
Net cash provided by operating activities		39,983				34,064
Cash flows from investing activities
Purchases of property and equipment		(6,150	)			(3,533	)
Purchases of investments		—				(44,412	)
Maturities of investments		—				45,000
Acquisition of business, net		(141,636	)			—
Net cash used in investing activities		(147,786	)			(2,945	)
Cash flows from financing activities
Repurchases of common stock		(40,000	)			(16,540	)
Net proceeds from exercise of options to purchase common stock		635				1,260
Net proceeds from employee stock purchase plan activity		411				391
Net cash used in financing activities		(38,954	)			(14,889	)
Effect of foreign currency exchange rate changes		661				(674	)
Net increase (decrease) in cash and cash equivalents		(146,096	)			15,556
Cash and cash equivalents at beginning of period		241,017				219,081
Cash and cash equivalents at end of period	$	94,921			$	234,637

SPS COMMERCE, INC. NON-GAAP RECONCILIATIONS (Unaudited; in thousands, except Margin, Adjusted EBITDA Margin, and per share amounts)
Adjusted EBITDA
	Three Months Ended March 31,
	2025				2024
Net income	$	22,196			$	18,003
Income tax expense		5,967				532
Depreciation and amortization of property and equipment		4,957				4,694
Amortization of intangible assets		8,588				4,338
Stock-based compensation expense		13,867				20,018
Realized gain from investments held and foreign currency impact on cash and investments		(366	)			(304	)
Investment income		(1,849	)			(2,879	)
Other		1,013				—
Adjusted EBITDA	$	54,373			$	44,402

Adjusted EBITDA Margin
	Three Months Ended March 31,
	2025				2024
Revenue	$	181,549			$	149,576
Net income		22,196				18,003
Margin		12	%			12	%
Adjusted EBITDA		54,373				44,402
Adjusted EBITDA Margin		30	%			30	%

Non-GAAP Income per Share
	Three Months Ended March 31,
	2025				2024
Net income	$	22,196			$	18,003
Stock-based compensation expense		13,867				20,018
Amortization of intangible assets		8,588				4,338
Realized gain from investments held and foreign currency impact on cash and investments		(366	)			(304	)
Other		1,013				—
Income tax effects of adjustments		(7,285	)			(9,554	)
Non-GAAP income	$	38,013			$	32,501
Shares used to compute net income and non-GAAP income per share
Basic		37,990				37,049
Diluted		38,163				37,686
Net income per share, basic	$	0.58			$	0.49
Non-GAAP adjustments to net income per share, basic		0.42				0.39
Non-GAAP income per share, basic	$	1.00			$	0.88
Net income per share, diluted	$	0.58			$	0.48
Non-GAAP adjustments to net income per share, diluted		0.42				0.38
Non-GAAP income per share, diluted	$	1.00			$	0.86

The annual per share amounts may not cross-sum due to rounding.

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

FAQ

What was SPS Commerce's (SPSC) revenue growth in Q1 2025?

SPS Commerce's revenue grew 21% to $181.5 million in Q1 2025, compared to $149.6 million in Q1 2024.

How much did SPSC's recurring revenue increase in Q1 2025?

SPSC's recurring revenue grew 23% compared to the first quarter of 2024.

What is SPS Commerce's revenue guidance for full-year 2025?

SPS Commerce expects FY2025 revenue between $758.5-763.0 million, representing 19-20% growth over 2024.

How many consecutive quarters of revenue growth has SPSC achieved?

SPS Commerce has achieved 97 consecutive quarters of revenue growth.

What was SPSC's Q1 2025 net income per share?

SPSC reported net income of $0.58 per diluted share in Q1 2025, compared to $0.48 in Q1 2024.