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SPS Commerce Reports Second Quarter 2021 Financial Results

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Company delivers 82nd consecutive quarter of topline growth with 25% growth in revenue and 22% growth in recurring revenue over second quarter 2020

MINNEAPOLIS, July 29, 2021 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the second quarter ended June 30, 2021.

Revenue was $94.5 million in the second quarter of 2021, compared to $75.6 million in the second quarter of 2020, reflecting 25% growth in revenue from the second quarter of 2020. Recurring revenue grew 22% from the second quarter of 2020.

Net income in the second quarter of 2021 was $10.2 million or $0.28 per diluted share, compared to net income of $11.2 million or $0.31 per diluted share, in the second quarter of 2020. Non-GAAP net income per diluted share was $0.46, compared to non-GAAP net income per diluted share of $0.37 in the second quarter of 2020. Adjusted EBITDA for the second quarter of 2021 increased 34% to $27.3 million compared to the second quarter of 2020.

“SPS Fulfillment is a proven tool that unlocks digital transformation potential for trading partners across all industries,” said Archie Black, President and CEO of SPS Commerce. “Omnichannel retail continues to fuel demand for SPS’ solutions, while growing our addressable market. This is a very exciting time for SPS Commerce.”

“SPS Commerce continues to deliver strong results driven by accelerating demand for our fulfillment solution, as retailers and suppliers adapt to new norms of consumers’ shopping preferences,” said Kim Nelson, CFO of SPS Commerce.

Guidance

Third quarter 2021 revenue is expected to be in the range of $96.7 million to $97.5 million. Third quarter net income per diluted share is expected to be in the range of $0.21 to $0.23 with fully diluted weighted average shares outstanding of approximately 37.0 million shares. Non-GAAP net income per diluted share is expected to be in the range of $0.40 to $0.41. Adjusted EBITDA is expected to be in the range of $25.3 million to $26.0 million. Non-cash, share-based compensation expense is expected to be approximately $7.0 million, depreciation expense is expected to be approximately $4.0 million and amortization expense is expected to be approximately $2.7 million.

For the full year of 2021, revenue is expected to be in the range of $380.6 million to $382.1 million, representing 22% growth over 2020. Full year net income per diluted share is expected to be in the range of $1.01 to $1.03, with fully diluted weighted average shares outstanding of approximately 36.9 million shares. Non-GAAP income per diluted share is expected to be in the range of $1.68 to $1.71. Adjusted EBITDA is expected to be in the range of $104.0 to $105.3 million, representing 20% to 21% growth over 2020. Non-cash, share-based compensation expense is expected to be approximately $27.6 million, depreciation expense is expected to be approximately $15.6 million and amortization expense is expected to be approximately $10.5 million.

Quarterly Conference Call

SPS Commerce will discuss its quarterly and annual results today via teleconference at 3:30 p.m. CT (4:30 p.m. ET). To access the call, please dial (877) 312-7508, or outside the U.S. (253) 237-1184, with Conference ID #7578057 at least five minutes prior to the 3:30 p.m. CT start time. 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 95,000 companies in retail, distribution, grocery and e-commerce have chosen SPS as their retail network. SPS has achieved 82 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, 1=INFINITY logo, AS THE NETWORK GROWS, SO DOES YOUR OPPORTUNITY, INFINITE RETAIL POWER, MASTERING THE RETAIL GAME and RSX are marks of SPS Commerce, Inc. and Registered in the U.S. Patent and Trademark Office. IN:FLUENCE, and others are further marks of SPS Commerce, Inc. These marks may be registered or otherwise protected in other countries.

SPS-F

Use of Non-GAAP Financial Measures

To supplement its financial statements, SPS Commerce also provides investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP net income per share, which are non-GAAP financial measures. SPS Commerce believes that these non-GAAP measures provide useful information to management, our board of directors, and investors regarding certain financial and business trends relating to its financial condition and results of operations. SPS Commerce's management uses these non-GAAP measures to compare the company's 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.

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

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.

SPS Commerce uses Adjusted EBITDA and Adjusted EBITDA Margin as measures of operating performance because they assist the company in comparing performance on a consistent basis, as they remove from operating results the impact of the company's capital structure. SPS Commerce believes Adjusted EBITDA and Adjusted EBITDA Margin are useful to an investor in evaluating the company's operating performance because they are widely used to measure a company's 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 the company's capital structure and the method by which assets were acquired.

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, and other adjustments as necessary for a fair presentation, divided by the weighted average number of shares of common stock outstanding during each period. SPS Commerce believes non-GAAP income per share is useful to an investor because it is widely used to measure a company's operating performance.

SPS Commerce includes an adjustment to non-GAAP income to reflect the income tax effects of the adjustments to GAAP net income, as discussed above. To quantify these tax effects, SPS Commerce recalculates income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments (e.g., stock-based compensation expense). 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.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the company's financial statements and are subject to inherent limitations. SPS Commerce urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release.

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 2021, 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, 2020, 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,

December 31,

2021

2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

184,367

$

149,692

Short-term investments

48,999

37,786

Accounts receivable

42,191

37,811

Allowance for credit losses

(4,255

)

(4,233

)

Accounts receivable, net

37,936

33,578

Deferred costs

40,149

37,988

Other assets

11,711

12,312

Total current assets

323,162

271,356

PROPERTY AND EQUIPMENT, less accumulated depreciation of $67,074 and $59,152, respectively

29,046

26,432

OPERATING LEASE RIGHT-OF-USE ASSETS

13,352

15,581

GOODWILL

135,354

134,853

INTANGIBLE ASSETS, net

54,950

60,230

INVESTMENTS

2,500

OTHER ASSETS

Deferred costs, non-current

13,692

12,607

Deferred income tax assets

246

194

Other assets, non-current

2,476

2,705

Total assets

$

572,278

$

526,458

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

$

5,942

$

5,354

Accrued compensation

27,469

22,872

Accrued expenses

5,221

11,161

Deferred revenue

48,845

37,947

Operating lease liabilities

3,960

2,798

Total current liabilities

91,437

80,132

OTHER LIABILITIES

Deferred revenue, non-current

4,991

2,996

Operating lease liabilities, non-current

17,733

19,672

Deferred income tax liabilities

3,368

2,937

Total liabilities

117,529

105,737

COMMITMENTS and CONTINGENCIES

STOCKHOLDERS’ EQUITY

Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding

Common stock, $0.001 par value; 110,000,000 shares authorized; 37,536,118 and 37,100,467 shares issued; and 35,859,353 and 35,487,217 outstanding, respectively

38

37

Treasury stock, at cost; 1,676,765 and 1,613,250 shares, respectively

(71,697

)

(65,247

)

Additional paid-in capital

413,182

393,462

Retained earnings

113,873

93,490

Accumulated other comprehensive loss

(647

)

(1,021

)

Total stockholders’ equity

454,749

420,721

Total liabilities and stockholders’ equity

$

572,278

$

526,458


SPS COMMERCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Revenues

$

94,539

$

75,573

$

184,633

$

149,765

Cost of revenues

31,730

24,326

61,700

47,870

Gross profit

62,809

51,247

122,933

101,895

Operating expenses

Sales and marketing

21,952

18,611

43,307

36,910

Research and development

8,899

7,466

17,605

15,034

General and administrative

15,758

12,743

30,495

24,652

Amortization of intangible assets

2,671

1,316

5,335

2,652

Total operating expenses

49,280

40,136

96,742

79,248

Income from operations

13,529

11,111

26,191

22,647

Other income (expense), net

(383

)

1,468

(708

)

795

Income before income taxes

13,146

12,579

25,483

23,442

Income tax expense

2,963

1,385

5,100

2,733

Net income

$

10,183

$

11,194

$

20,383

$

20,709

Net income per share

Basic

$

0.28

$

0.32

$

0.57

$

0.59

Diluted

$

0.28

$

0.31

$

0.55

$

0.58

Weighted average common shares used to compute net income per share

Basic

35,903

35,030

35,828

35,051

Diluted

36,753

36,016

36,741

35,995

Per share amounts may not foot due to rounding.

SPS COMMERCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)

Six Months Ended

June 30,

2021

2020

Cash flows from operating activities

Net income

$

20,383

$

20,709

Reconciliation of net income to net cash provided by operating activities

Deferred income taxes

351

1,443

Change in earn-out liability

72

Depreciation and amortization of property and equipment

7,294

6,276

Amortization of intangible assets

5,335

2,652

Provision for credit losses

2,831

3,020

Stock-based compensation

14,424

9,353

Other, net

170

(129

)

Changes in assets and liabilities

Accounts receivable

(6,945

)

(7,071

)

Deferred costs

(3,338

)

275

Other current and non-current assets

(1,201

)

3,141

Accounts payable

(147

)

321

Accrued compensation

3,246

(6,166

)

Accrued expenses

(2,087

)

(964

)

Deferred revenue

12,893

4,705

Operating leases

1,449

(842

)

Net cash provided by operating activities

54,658

36,795

Cash flows from investing activities

Purchases of property and equipment

(8,738

)

(8,396

)

Purchases of investments

(44,034

)

(55,144

)

Maturities of investments

35,000

31,050

Net cash used in investing activities

(17,772

)

(32,490

)

Cash flows from financing activities

Repurchases of common stock

(6,450

)

(18,950

)

Net proceeds from exercise of options to purchase common stock

4,030

9,426

Net proceeds from employee stock purchase plan

2,186

1,550

Payments for contingent consideration

(2,042

)

(688

)

Net cash used in financing activities

(2,276

)

(8,662

)

Effect of foreign currency exchange rate changes

65

(45

)

Net increase (decrease) in cash and cash equivalents

34,675

(4,402

)

Cash and cash equivalents at beginning of period

149,692

179,252

Cash and cash equivalents at end of period

$

184,367

$

174,850


SPS COMMERCE, INC.

NON-GAAP RECONCILIATION

(Unaudited; in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Adjusted EBITDA

Net income

$

10,183

$

11,194

$

20,383

$

20,709

Depreciation and amortization of property

and equipment

3,529

3,138

7,294

6,276

Amortization of intangible assets

2,671

1,316

5,335

2,652

Interest income

(79

)

(332

)

(176

)

(972

)

Realized (gain) loss from foreign currency on cash and investments held

349

(1,370

)

638

(127

)

Income tax expense

2,963

1,385

5,100

2,733

Stock-based compensation expense

7,499

5,009

14,424

9,353

Other

213

82

(213

)

154

Adjusted EBITDA

$

27,328

$

20,422

$

52,785

$

40,778

Adjusted EBITDA Margin

Net income

$

10,183

$

11,194

$

20,383

$

20,709

Revenue

94,539

75,573

184,633

149,765

Margin

11

%

15

%

11

%

14

%

Adjusted EBITDA

$

27,328

$

20,422

$

52,785

$

40,778

Revenue

94,539

75,573

184,633

149,765

Adjusted EBITDA Margin

29

%

27

%

29

%

27

%

Non-GAAP Income

Net income

$

10,183

$

11,194

$

20,383

$

20,709

Stock-based compensation expense

7,499

5,009

14,424

9,353

Amortization of intangible assets

2,671

1,316

5,335

2,652

Realized (gain) loss from foreign currency on cash and investments held

349

(1,370

)

638

(127

)

Other

213

82

(213

)

154

Income tax effects of adjustments

(3,999

)

(2,886

)

(7,974

)

(5,912

)

Non-GAAP income

$

16,916

$

13,345

$

32,593

$

26,829

Shares used to compute non-GAAP income per share

Basic

35,903

35,030

35,828

35,051

Diluted

36,753

36,016

36,741

35,995

Non-GAAP income per share

Basic

$

0.47

$

0.38

$

0.91

$

0.77

Diluted

$

0.46

$

0.37

$

0.89

$

0.75

Per share amounts may not foot due to rounding.

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