NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A – General
Business Description
SPS Commerce is a leading provider of cloud-based supply chain management services across our global retail network. Our products make it easier for retailers, suppliers, grocers, distributors, and logistics firms to orchestrate the management of item data, order fulfillment, inventory control, and sales analytics across omnichannel retail channels. SPS Commerce delivers our products using a full-service model whereby our internal experts monitor, update, and boost network performance on our customers’ behalf.
The services offered by SPS Commerce eliminate the need for on-premise software and support staff by taking on that capability on the customer’s behalf. The services we provide enable our customers to increase their supply cycle agility, optimize their inventory levels and sell-through, reduce operational costs and gain increased visibility into customer orders, to help ensure that suppliers, grocers, distributors, and logistics firms can satisfy exacting retailer requirements.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SPS Commerce, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.
This interim financial information has been prepared under the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (“SEC”). We have included all normal recurring adjustments considered necessary to provide a fair presentation of our financial position, results of operations, stockholders’ equity, and cash flows for the interim periods presented. Operating results for these interim periods are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Significant Accounting Policies
There were no material changes in our significant accounting policies during the six months ended June 30, 2022. See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, for additional information regarding our significant accounting policies.
Accounting Pronouncements Not Yet Adopted | | | | | | | | | | | | | | |
Standard | Date of Issuance | Description | Date of Required Adoption | Effect on the Financial Statements |
ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | October 2021 | This amendment requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, effective for all business combinations in the year of adoption and thereafter.
| January 2023 | The adoption of this standard may have a material impact on the purchase accounting for business combinations depending on the specific amount of contract assets and liabilities being acquired. |
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SPS COMMERCE, INC. | 7 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
NOTE B – Revenue
We derive our revenues from the following revenue streams:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Recurring revenues: | | | | | | | |
Fulfillment | $ | 87,887 | | | $ | 75,228 | | | $ | 172,618 | | | $ | 146,632 | |
Analytics | 11,648 | | | 10,381 | | | 22,944 | | | 20,525 | |
Other | 1,628 | | | 1,331 | | | 3,168 | | | 2,584 | |
Recurring revenues | 101,163 | | | 86,940 | | | 198,730 | | | 169,741 | |
One-time revenues | 8,015 | | | 7,599 | | | 15,641 | | | 14,892 | |
Total revenue | $ | 109,178 | | | $ | 94,539 | | | $ | 214,371 | | | $ | 184,633 | |
Revenues are the amount that reflects the consideration we are contractually and legally entitled to, as well as expect to collect, in exchange for those services.
Recurring Revenues
Recurring revenues consist of recurring subscriptions from customers that utilize our Fulfillment, Analytics, and Other supply chain management products. Revenue for these products is generally recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our contracts with our recurring revenue customers are recurring in nature, generally ranging from monthly to annual, and generally allow the customer to cancel the contract for any reason with 30 to 90 days’ notice. Timing of billings varies by customer and by contract type and generally are either in advance or within 30 days of the service being performed.
Given that the recurring revenue contracts are for one year or less, we have applied the optional exemption to not disclose information about the remaining performance obligations for recurring revenue contracts.
One-time Revenues
One-time revenues consist of set-up fees and miscellaneous fees from customers.
Set-up revenues
Set-up fees are specific for each connection a customer has with a trading partner. These nonrefundable fees are necessary for our customers to utilize our services and do not provide any standalone value. Many of our customers have connections with numerous trading partners.
Set-up fees constitute a material renewal option right that provide customers a significant future incentive that would not be otherwise available to that customer unless they entered into the contract, as the set-up fees will not be incurred again upon contract renewal. As such, set-up fees and related costs are deferred and recognized ratably over two years, which is the estimated period for which a material right is present for our customers.
The table below presents the activity of the portion of the deferred revenue liability relating to set-up fees:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Balance, beginning of period | $ | 14,938 | | | $ | 12,102 | | | $ | 14,459 | | | $ | 11,118 | |
Invoiced set-up fees | 4,058 | | | 4,343 | | | 8,061 | | | 8,210 | |
Recognized set-up fees | (3,687) | | | (3,101) | | | (7,211) | | | (5,984) | |
Balance, end of period | $ | 15,309 | | | $ | 13,344 | | | $ | 15,309 | | | $ | 13,344 | |
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SPS COMMERCE, INC. | 8 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
The entire balance of deferred set-up fees will be recognized within two years. Those that will be recognized within the next year are classified as current, whereas the remainder are classified as non-current.
Miscellaneous one-time revenues
Miscellaneous one-time fees consist of professional services and testing and certification.
The contract period for these one-time fees is for one year or less and recognized at the time service is provided. We have applied the optional exemption to not disclose information about the remaining performance obligations for miscellaneous one-time fee contracts since they have original durations of one year or less.
NOTE C – Deferred Costs
The deferred costs activity was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Balance, beginning of period | $ | 62,610 | | | $ | 51,540 | | | $ | 59,720 | | | $ | 50,595 | |
Incurred deferred costs | 17,637 | | | 16,036 | | | 35,418 | | | 29,463 | |
Amortized deferred costs | (15,582) | | | (13,735) | | | (30,473) | | | (26,217) | |
Balance, end of period | $ | 64,665 | | | $ | 53,841 | | | $ | 64,665 | | | $ | 53,841 | |
NOTE D – Financial Instruments
Cash Equivalents and Investments
Cash equivalents and investments consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
(in thousands) | Amortized Cost | | Unrealized Losses, net | | Fair Value | | Amortized Cost | | Unrealized Gains (Losses), net | | Fair Value |
Cash equivalents: | | | | | | | | | | | |
Money market funds | $ | 138,729 | | | $ | — | | | $ | 138,729 | | | $ | 138,205 | | | $ | — | | | $ | 138,205 | |
Certificates of deposit | 6,904 | | | — | | | 6,904 | | | 7,268 | | | — | | | 7,268 | |
Marketable securities: | | | | | | | | | | | |
Commercial paper | 39,634 | | | (25) | | | 39,609 | | | 34,984 | | | 7 | | | 34,991 | |
U.S. treasury securities | — | | | — | | | — | | | 7,500 | | | (1) | | | 7,499 | |
| $ | 185,267 | | | $ | (25) | | | $ | 185,242 | | | $ | 187,957 | | | $ | 6 | | | $ | 187,963 | |
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SPS COMMERCE, INC. | 9 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
Recurring Fair Value Measurements
The following table details the fair value hierarchy of our assets and liabilities measured at a fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
Assets: | | | | | | | | | | | | | | | |
Cash equivalents: | | | | | | | | | | | | | | | |
Money market funds | $ | 138,729 | | | $ | — | | | $ | — | | | $ | 138,729 | | | $ | 138,205 | | | $ | — | | | $ | — | | | $ | 138,205 | |
Certificates of deposit | 6,904 | | | — | | | — | | | 6,904 | | | 7,268 | | | — | | | — | | | 7,268 | |
Marketable securities: | | | | | | | | | | | | | | | |
Commercial paper | — | | | 39,609 | | | — | | | 39,609 | | | — | | | 34,991 | | | — | | | 34,991 | |
U.S. treasury securities | — | | | — | | | — | | | — | | | — | | | 7,499 | | | — | | | 7,499 | |
| $ | 145,633 | | | $ | 39,609 | | | $ | — | | | $ | 185,242 | | | $ | 145,473 | | | $ | 42,490 | | | $ | — | | | $ | 187,963 | |
See Note E to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, for additional information regarding the three levels of inputs that may be used to measure fair value.
NOTE E – Allowance for Credit Losses
The allowance for credit losses activity, included in accounts receivable, net, was as follows:
| | | | | | | | | | | |
| Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 |
Balance, beginning of period | $ | 4,249 | | | $ | 4,233 | |
Provision for credit losses | 2,634 | | | 2,831 | |
Write-offs, net of recoveries | (2,429) | | | (2,809) | |
Balance, end of period | $ | 4,454 | | | $ | 4,255 | |
NOTE F – Property and Equipment, Net
Property and equipment, net consisted of the following: | | | | | | | | | | | | | | |
(in thousands) | | June 30, 2022 | | December 31, 2021 |
Internally developed software | | $ | 47,230 | | | $ | 44,981 | |
Computer equipment | | 31,305 | | | 29,329 | |
Leasehold improvements | | 16,650 | | | 16,685 | |
Office equipment and furniture | | 10,929 | | | 10,972 | |
Property and equipment, cost | | 106,114 | | | 101,967 | |
Less: accumulated depreciation and amortization | | (74,114) | | | (70,066) | |
Total property and equipment, net | | $ | 32,000 | | | $ | 31,901 | |
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SPS COMMERCE, INC. | 10 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
NOTE G – Goodwill and Intangible Assets, Net
Goodwill
The activity in goodwill was as follows:
| | | | | | | | | | | |
| Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 |
Balance, beginning of period | $ | 143,663 | | | $ | 134,853 | |
Foreign currency translation | (703) | | | 233 | |
Remeasurement from provisional purchase accounting amount | — | | | 268 | |
Balance, end of period | $ | 142,960 | | | $ | 135,354 | |
Intangible Assets
Intangible assets, net consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 |
($ in thousands) | Gross Carrying Amount | | Accumulated Amortization | | Foreign Currency Translation | | Net | | Weighted Average Remaining Amortization Period |
Subscriber relationships | $ | 61,142 | | | $ | (33,964) | | | $ | (51) | | | $ | 27,127 | | | 6.0 years |
Acquired technology | 35,327 | | | (8,857) | | | — | | | 26,470 | | | 6.3 years |
| $ | 96,469 | | | $ | (42,821) | | | $ | (51) | | | $ | 53,597 | | | 6.2 years |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
($ in thousands) | Gross Carrying Amount | | Accumulated Amortization | | Foreign Currency Translation | | Net | | Weighted Average Remaining Amortization Period |
Subscriber relationships | $ | 61,270 | | | $ | (29,866) | | | $ | (1,395) | | | $ | 30,009 | | | 6.4 years |
Acquired technology | 35,316 | | | (6,738) | | | — | | | 28,578 | | | 6.8 years |
| $ | 96,586 | | | $ | (36,604) | | | $ | (1,395) | | | $ | 58,587 | | | 6.6 years |
The estimated future annual amortization expense related to intangible assets is as follows:
| | | | | |
(in thousands) | |
Remainder of 2022 | $ | 4,924 | |
2023 | 9,777 | |
2024 | 8,534 | |
2025 | 8,396 | |
2026 | 7,392 | |
Thereafter | 14,573 | |
Total future amortization | $ | 53,597 | |
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SPS COMMERCE, INC. | 11 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
NOTE H – Commitments and Contingencies
Leases
The components of lease expense were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Operating lease cost | $ | 740 | | | $ | 896 | | | $ | 1,499 | | | $ | 1,436 | |
Variable lease cost | 856 | | | 950 | | | 1,649 | | | 1,718 | |
| $ | 1,596 | | | $ | 1,846 | | | $ | 3,148 | | | $ | 3,154 | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | |
| Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 |
Cash paid for amounts included in the measurement of lease liabilities | | | |
Operating cash flows from operating leases | $ | 2,176 | | | $ | 1,204 | |
Supplemental balance sheet information related to operating leases was as follows:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Weighted-average remaining lease term | 4.4 years | | 4.8 years |
Weighted-average discount rate | 4.0 | % | | 4.0 | % |
At June 30, 2022, our future minimum payments under operating leases were as follows:
| | | | | |
(in thousands) | |
Remainder of 2022 | $ | 2,478 | |
2023 | 4,690 | |
2024 | 4,278 | |
2025 | 3,874 | |
2026 | 3,770 | |
Thereafter | 1,268 | |
Total future gross payments | $ | 20,358 | |
Less: imputed interest | (1,778) | |
Total operating lease liabilities | $ | 18,580 | |
Purchase Commitments
We have entered into separate noncancelable agreements with computing infrastructure and customer relationship management vendors for services through 2023. At June 30, 2022, the total remaining purchase commitments were $6.0 million.
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SPS COMMERCE, INC. | 12 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
NOTE I – Stockholders’ Equity
Share Repurchase Programs
Our board of directors has authorized multiple non-concurrent programs to repurchase our common stock. Details of the programs and activity thereunder were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Effective Date | Expiration Date | | Share Value Authorized for Repurchase | | Share Value Repurchased | | Unused & Expired Share Repurchase Value | | Share Value Available for Future Repurchase |
2019 Program | November 2019 | November 2021 | | $ | 50,000 | | $ | 29,611 | | | $ | 20,389 | | | N/A |
2021 Program | November 2021 | November 2023 | | 50,000 | | 39,992 | | | N/A | | $ | 10,008 | |
On July 26, 2022, our board of directors authorized a new share repurchase program ("2022 Program"), effective August 26, 2022, that allows up to $50.0 million of common stock to be repurchased, expiring in July 2024. The 2021 Program will terminate on the effective date of the 2022 Program.
The share repurchase activity by period was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands, except per share amounts) | 2022 | | 2021 | | 2022 | | 2021 |
Shares repurchased cost | $ | 14,997 | | | $ | 6,450 | | | $ | 30,223 | | | $ | 6,450 | |
Number of shares repurchased | 133,652 | | | 63,515 | | | 255,196 | | | 63,515 | |
| | | | | | | |
Average price per repurchased share | $ | 112.21 | | | $ | 101.55 | | | $ | 118.43 | | | $ | 101.55 | |
NOTE J – Stock-Based Compensation
Our equity compensation plans provide for the grant of incentive and nonqualified stock options, as well as other stock-based awards including performance share units (“PSUs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and deferred stock units (“DSUs”), to employees, non-employee directors and other consultants who provide services to us. We also provide an employee stock purchase plan (“ESPP”) and 401(k) match to eligible participants.
We recognize stock-based compensation expense based on grant date award fair value. This cost is recognized over the period for which the employee is required to provide service in exchange for the award or the award performance period, except for expenses relating to retirement-eligible employees that have not given their required notice, which is recognized on a pro-rata basis over the notice period prior to retirement. At June 30, 2022, there were approximately 13.2 million shares available for grant under approved equity compensation plans.
Stock-based compensation expense was allocated in the condensed consolidated statements of comprehensive income as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Cost of revenues | $ | 2,152 | | | $ | 1,746 | | | $ | 4,331 | | | $ | 3,249 | |
Operating expenses | | | | | | | |
Sales and marketing | 1,958 | | | 1,738 | | | 3,990 | | | 3,220 | |
Research and development | 1,380 | | | 1,106 | | | 2,854 | | | 2,017 | |
General and administrative | 3,171 | | | 2,909 | | | 6,501 | | | 5,938 | |
| $ | 8,661 | | | $ | 7,499 | | | $ | 17,676 | | | $ | 14,424 | |
| | | | | | | | |
SPS COMMERCE, INC. | 13 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
Stock-based compensation expense by grant type or plan was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Stock options | $ | 463 | | | $ | 522 | | | $ | 940 | | | $ | 1,074 | |
PSUs | 2,004 | | | 1,931 | | | 4,703 | | | 4,016 | |
RSUs | 5,094 | | | 4,115 | | | 9,732 | | | 7,536 | |
RSAs & DSUs | 110 | | | 110 | | | 218 | | | 217 | |
ESPP | 458 | | | 336 | | | 1,032 | | | 662 | |
401(k) stock match | 532 | | | 485 | | | 1,051 | | | 919 | |
| $ | 8,661 | | | $ | 7,499 | | | $ | 17,676 | | | $ | 14,424 | |
As of June 30, 2022, there was $44.0 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a primarily straight-line basis over a weighted average period of 2.6 years.
Stock Options
Our stock option activity was as follows:
| | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Options (#) | | Weighted Average Exercise Price ($/share) |
Outstanding, beginning of period | 678,650 | | | $ | 44.76 | |
Granted | 47,171 | | | 122.36 | |
Exercised | (18,404) | | | 37.52 | |
Forfeited | (3,759) | | | 85.84 | |
Outstanding, end of period | 703,658 | | | $ | 49.93 | |
Of the total outstanding options at June 30, 2022, 0.6 million were exercisable. The outstanding and exercisable options had a weighted average exercise price of $41.52 per share and a weighted average remaining contractual life of 3.0 years.
The weighted average grant date fair value of options granted during the six months ended June 30, 2022 was $40.78 per share. This was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
| | | | | |
Life (in years) | 4.3 |
Volatility | 37.4 | % |
Dividend yield | — | |
Risk-free interest rate | 2.2 | % |
Performance Share Units, Restricted Stock Units and Awards, and Deferred Stock Units
In each of the quarters ended March 31, 2022, 2021, 2020, and 2019 we granted PSU awards with a target performance level. These awards are earned based upon our Company’s total shareholder return as compared to an indexed total shareholder return over the course of a fiscal based three-year performance period, starting in the year of grant. Earned awards vest in the quarter following the conclusion of the performance period. In the three months ended March 31, 2022,
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SPS COMMERCE, INC. | 14 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
PSU awards granted in 2019 vested at the maximum performance level and less than 0.1 million shares of common stock were issued.
Activity for our PSUs, RSUs, RSAs, and DSUs in aggregate was as follows:
| | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| # | | Weighted Average Grant Date Fair Value ($/share) |
Outstanding, beginning of period | 702,160 | | | $ | 78.03 | |
Granted | 241,902 | | | 126.60 | |
Vested and common stock issued | (220,002) | | | 62.49 | |
Forfeited | (16,123) | | | 95.03 | |
Outstanding, end of period | 707,937 | | | $ | 99.07 | |
The number of PSUs, RSUs, RSAs, and DSUs outstanding at June 30, 2022 included less than 0.1 million units that have vested, but the shares of common stock have not yet been issued, pursuant to the terms of the underlying agreements.
Employee Stock Purchase Plan
Our ESPP activity was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands, except shares) | 2022 | | 2021 | | 2022 | | 2021 |
Amounts for shares purchased | $ | 3,203 | | | $ | 2,081 | | | $ | 3,350 | | | $ | 2,186 | |
Shares purchased | 33,337 | | | 24,528 | | | 35,035 | | | 26,149 | |
A total of 1.8 million shares of common stock are reserved for issuance under the ESPP as of June 30, 2022.
The fair value was estimated based on the market price of our common stock at the beginning of the offering period using the following assumptions:
| | | | | |
Life (in years) | 0.5 |
Volatility | 37.4 | % |
Dividend yield | — | |
Risk-free interest rate | 0.2 | % |
NOTE K – Income Taxes
We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pretax income and adjust the provision for discrete tax items recorded in the period. Differences between our effective tax rate and statutory tax rates are primarily due to the impact of permanently non-deductible expenses partially offset by the federal research and development credits and tax benefits associated with foreign-derived intangible income. Additionally, excess tax benefits generated upon settlement or exercise of stock awards are recognized as a reduction to income tax expense as a discrete tax item in the quarter that the event occurs, creating potentially significant fluctuation in tax expense by quarter and by year. Our provisions for income taxes includes current federal, state, and foreign income tax expense, as well as deferred tax expense.
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SPS COMMERCE, INC. | 15 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
NOTE L – Other Income and Expense
Other expense, net included the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Investment income | $ | 172 | | | $ | 79 | | | $ | 220 | | | $ | 176 | |
Realized loss from foreign currency on cash and investments held | (1,327) | | | (349) | | | (859) | | | (638) | |
Other expense, net | (183) | | | (113) | | | (276) | | | (246) | |
Total other expense, net | $ | (1,338) | | | $ | (383) | | | $ | (915) | | | $ | (708) | |
NOTE M – Net Income Per Share
The components and computation of basic and diluted net income per share were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands, except per share amounts) | 2022 | | 2021 | | 2022 | | 2021 |
Numerator | | | | | | | |
Net income | $ | 10,753 | | | $ | 10,183 | | | $ | 23,356 | | | $ | 20,383 | |
Denominator | | | | | | | |
Weighted average common shares outstanding, basic | 36,085 | | | 35,903 | | | 36,110 | | | 35,828 | |
Options to purchase common stock | 391 | | | 505 | | | 405 | | | 536 | |
PSUs, RSUs, RSAs, and DSUs | 386 | | | 345 | | | 382 | | | 377 | |
Weighted average common shares outstanding, diluted | 36,862 | | | 36,753 | | | 36,897 | | | 36,741 | |
Net income per share | | | | | | | |
Basic | $ | 0.30 | | | $ | 0.28 | | | $ | 0.65 | | | $ | 0.57 | |
Diluted | $ | 0.29 | | | $ | 0.28 | | | $ | 0.63 | | | $ | 0.55 | |
The number of outstanding potential common shares that were excluded from the calculation of diluted net income per share as they were anti-dilutive was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(in thousands) | 2022 | | 2021 | | 2022 | | 2021 |
Anti-dilutive shares | 242 | | | 129 | | | 211 | | | 93 | |
| | | | | | | | |
SPS COMMERCE, INC. | 16 | Form 10-Q for the Quarterly Period ended June 30, 2022 |
NOTE N – Geographic Information
Revenue
The percentage of domestic revenue, which we define as the percentage of consolidated revenue that was attributable to customers based within the U.S., was as follows:
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| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Domestic revenue | 84 | % | | 84 | % | | 84 | % | | 84 | % |
No single jurisdiction outside of the U.S. had revenues in excess of 10%.
Property and Equipment
The percentage of property and equipment, net located at subsidiary and office locations outside of the U.S. was as follows:
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| June 30, 2022 | | December 31, 2022 |
International property and equipment | 13 | % | | 12 | % |
NOTE O - Subsequent Events
Business Acquisitions
Effective July 19, 2022, we acquired all of the outstanding equity ownership interests of GCommerce, Inc., a leading EDI provider within the automotive aftermarket industry. Pursuant to the definitive agreement, the purchase price of approximately $45 million was paid in cash at closing, and is subject to post-closing adjustments.
Stockholders' Equity
See Note I for information regarding the authorization of a new share repurchase program on July 26, 2022.
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SPS COMMERCE, INC. | 17 | Form 10-Q for the Quarterly Period ended June 30, 2022 |