SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud
services, today announced financial results for the second quarter
ended June 30, 2022.
Second Quarter 2022 Financial Highlights
- Revenue was $109.2 million in the second quarter of 2022,
compared to $94.5 million in the second quarter of 2021, reflecting
15% growth.
- Recurring revenue grew 16% from the second quarter of
2021.
- Net income was $10.8 million or $0.29 per diluted share,
compared to net income of $10.2 million or $0.28 per diluted share
in the second quarter of 2021.
- Non-GAAP income per diluted share was $0.53, compared to
non-GAAP income per diluted share of $0.46 in the second quarter of
2021.
- Adjusted EBITDA for the second quarter of 2022 increased 13% to
$30.9 million compared to the second quarter of 2021.
“SPS Commerce continues to capitalize on the retail industry’s
ongoing investments in supply chain management efficiency, digital
transformation, and cloud migration,” said Archie Black, CEO of SPS
Commerce. “Retailers and suppliers are more motivated than ever to
overhaul their systems to accommodate the demands of omnichannel
retail and to address ongoing supply chain disruptions.”
“SPS Commerce is well positioned for long-term growth as macro
dynamics and the growing need for trading partner collaboration
continue to fuel demand for SPS’ full-service EDI,” said Kim
Nelson, CFO of SPS Commerce.
Share Repurchase Program
The Company also announced today that the Board of Directors of
SPS Commerce authorized a new program to repurchase up to $50.0
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 26, 2022, and expires on July 26, 2024. The Company’s
November 2021 program that previously authorized repurchase of up
to $50.0 million will terminate when the new program goes into
effect.
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 36.0 million shares
of outstanding common stock as of June 30, 2022. The Company
intends to finance the share repurchase program with cash on
hand.
Guidance
Third Quarter 2022 Guidance
- Revenue is expected to be in the range of $113.4 million to
$114.4 million.
- Net income per diluted share is expected to be in the range of
$0.29 to $0.31, with fully diluted weighted average shares
outstanding of 37.2 million shares.
- Non-GAAP income per diluted share is expected to be in the
range of $0.51 to $0.52.
- Adjusted EBITDA is expected to be in the range of $32.0 million
to $32.7 million.
- Non-cash, share-based compensation expense is expected to be
$8.5 million, depreciation expense is expected to be $4.5 million,
and amortization expense is expected to be $3.0 million.
Full Year 2022 Guidance
- Revenue is expected to be in the range of $446.4 million to
$448.4 million, representing 16% growth over 2021.
- Net income per diluted share is expected to be in the range of
$1.25 to $1.29, with fully diluted weighted average shares
outstanding of 37.1 million shares.
- Non-GAAP income per diluted share is expected to be in the
range of $2.13 to $2.15.
- Adjusted EBITDA is expected to be in the range of $128.2
million to $129.4 million, representing 20% to 21% growth over
2021.
- Non-cash, share-based compensation expense is expected to be
$34.2 million, depreciation expense is expected to be $17.3
million, and amortization expense is expected to be $11.1
million.
Quarterly Conference Call
To access the conference call, please pre-register
at:https://register.vevent.com/register/BIb996f82a68ba4f669fb6d3f83720fe5d.
Once registered, participants will receive a dial-in number and PIN
to access the call. While not required, it is recommended you join
10 minutes prior to the event start. A live webcast and replay of
the call will also be available at http://investors.spscommerce.com
under the Events and Presentations menu.
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 105,000 companies in retail,
distribution, grocery and e-commerce have chosen SPS as their
retail network. SPS has achieved 86 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 our 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 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
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.
These non-GAAP 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
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 or loss, 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 Measure:
Non-GAAP income per share consists of net income plus
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, 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. 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 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 2022, 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,
2021, 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.
Contact:Investor RelationsThe Blueshirt GroupIrmina Blaszczyk
& Lisa LaukkanenSPSC@blueshirtgroup.com415-217-4962
SPS COMMERCE,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited; in thousands, except shares)
|
June 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
212,725 |
|
207,552 |
Short-term investments |
|
46,513 |
|
49,758 |
Accounts receivable |
|
44,559 |
|
38,811 |
Allowance for credit losses |
|
(4,454) |
|
(4,249) |
Accounts receivable, net |
|
40,105 |
|
34,562 |
Deferred costs |
|
48,294 |
|
44,529 |
Other assets |
|
17,912 |
|
16,042 |
Total current assets |
|
365,549 |
|
352,443 |
Property and equipment,
net |
|
32,000 |
|
31,901 |
Operating lease right-of-use
assets |
|
9,578 |
|
10,851 |
Goodwill |
|
142,960 |
|
143,663 |
Intangible assets, net |
|
53,597 |
|
58,587 |
Other assets |
|
|
|
Deferred costs, non-current |
|
16,371 |
|
15,191 |
Deferred income tax assets |
|
191 |
|
182 |
Other assets, non-current |
|
2,530 |
|
3,028 |
Total assets |
$ |
622,776 |
|
615,846 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
4,442 |
|
8,330 |
Accrued compensation |
|
25,855 |
|
31,661 |
Accrued expenses |
|
7,508 |
|
8,345 |
Deferred revenue |
|
59,093 |
|
50,428 |
Operating lease liabilities |
|
4,341 |
|
4,108 |
Total current liabilities |
|
101,239 |
|
102,872 |
Other liabilities |
|
|
|
Deferred revenue, non-current |
|
5,281 |
|
5,144 |
Operating lease liabilities, non-current |
|
14,239 |
|
16,426 |
Deferred income tax liabilities |
|
4,997 |
|
7,145 |
Total liabilities |
|
125,756 |
|
131,587 |
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;
38,074,026 and 37,798,610 shares issued; and 36,029,477 and
36,009,257 shares outstanding, respectively |
|
38 |
|
38 |
Treasury Stock, at cost; 2,044,549 and 1,789,353 shares,
respectively |
|
(115,900) |
|
(85,677) |
Additional paid-in capital |
|
453,922 |
|
433,258 |
Retained earnings |
|
161,443 |
|
138,087 |
Accumulated other comprehensive loss |
|
(2,483) |
|
(1,447) |
Total stockholders’ equity |
|
497,020 |
|
484,259 |
Total liabilities and stockholders’ equity |
$ |
622,776 |
|
615,846 |
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, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Revenues |
$ |
109,178 |
|
$ |
94,539 |
|
$ |
214,371 |
|
$ |
184,633 |
Cost of revenues |
|
37,530 |
|
|
31,730 |
|
|
72,919 |
|
|
61,700 |
Gross profit |
|
71,648 |
|
|
62,809 |
|
|
141,452 |
|
|
122,933 |
Operating expenses |
|
|
|
|
|
|
|
Sales and marketing |
|
24,582 |
|
|
21,952 |
|
|
49,237 |
|
|
43,307 |
Research and development |
|
11,432 |
|
|
8,899 |
|
|
22,133 |
|
|
17,605 |
General and administrative |
|
17,198 |
|
|
15,758 |
|
|
32,666 |
|
|
30,495 |
Amortization of intangible assets |
|
2,468 |
|
|
2,671 |
|
|
4,938 |
|
|
5,335 |
Total operating expenses |
|
55,680 |
|
|
49,280 |
|
|
108,974 |
|
|
96,742 |
Income from operations |
|
15,968 |
|
|
13,529 |
|
|
32,478 |
|
|
26,191 |
Other expense, net |
|
(1,338) |
|
|
(383) |
|
|
(915) |
|
|
(708) |
Income before income
taxes |
|
14,630 |
|
|
13,146 |
|
|
31,563 |
|
|
25,483 |
Income tax expense |
|
3,877 |
|
|
2,963 |
|
|
8,207 |
|
|
5,100 |
Net income |
$ |
10,753 |
|
$ |
10,183 |
|
$ |
23,356 |
|
$ |
20,383 |
|
|
|
|
|
|
|
|
Net income per share |
|
|
|
|
|
|
|
Basic |
$ |
0.30 |
|
$ |
0.28 |
|
$ |
0.65 |
|
$ |
0.57 |
Diluted |
$ |
0.29 |
|
$ |
0.28 |
|
$ |
0.63 |
|
$ |
0.55 |
|
|
|
|
|
|
|
|
Weighted average common shares
used to compute net income per share |
|
|
|
|
|
|
|
Basic |
|
36,085 |
|
|
35,903 |
|
|
36,110 |
|
|
35,828 |
Diluted |
|
36,862 |
|
|
36,753 |
|
|
36,897 |
|
|
36,741 |
SPS COMMERCE,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOW(Unaudited; in thousands)
|
Six Months EndedJune 30, |
|
|
2022 |
|
|
2021 |
Cash flows from operating
activities |
|
|
|
Net income |
$ |
23,356 |
|
$ |
20,383 |
Reconciliation of net income to net cash provided by operating
activities |
|
|
|
Deferred income taxes |
|
(2,160) |
|
|
351 |
Depreciation and amortization of property and equipment |
|
7,814 |
|
|
7,294 |
Amortization of intangible assets |
|
4,938 |
|
|
5,335 |
Provision for credit losses |
|
2,634 |
|
|
2,831 |
Stock-based compensation |
|
17,676 |
|
|
14,424 |
Other, net |
|
8 |
|
|
170 |
Changes in assets and liabilities |
|
|
|
Accounts receivable |
|
(7,862) |
|
|
(6,945) |
Deferred costs |
|
(5,095) |
|
|
(3,338) |
Other current and non-current assets |
|
(1,423) |
|
|
(1,201) |
Accounts payable |
|
(3,234) |
|
|
(147) |
Accrued compensation |
|
(7,186) |
|
|
3,246 |
Accrued expenses |
|
(805) |
|
|
(2,087) |
Deferred revenue |
|
8,802 |
|
|
12,893 |
Operating leases |
|
(678) |
|
|
1,449 |
Net cash provided by operating activities |
|
36,785 |
|
|
54,658 |
Cash flows from investing
activities |
|
|
|
Purchases of property and equipment |
|
(8,191) |
|
|
(8,738) |
Purchases of investments |
|
(114,603) |
|
|
(44,034) |
Maturities of investments |
|
117,500 |
|
|
35,000 |
Net cash used in investing activities |
|
(5,294) |
|
|
(17,772) |
Cash flows from financing
activities |
|
|
|
Repurchases of common stock |
|
(30,223) |
|
|
(6,450) |
Net proceeds from exercise of options to purchase common stock |
|
690 |
|
|
4,030 |
Net proceeds from employee stock purchase plan |
|
3,350 |
|
|
2,186 |
Payments for contingent consideration |
|
— |
|
|
(2,042) |
Net cash used in financing activities |
|
(26,183) |
|
|
(2,276) |
Effect of foreign currency
exchange rate changes |
|
(135) |
|
|
65 |
Net increase in cash and cash
equivalents |
|
5,173 |
|
|
34,675 |
Cash and cash equivalents at
beginning of period |
|
207,552 |
|
|
149,692 |
Cash and cash equivalents at
end of period |
$ |
212,725 |
|
$ |
184,367 |
SPS COMMERCE, INC.NON-GAAP
RECONCILIATION(Unaudited; in thousands, except per share
amounts)
Adjusted EBITDA |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Net income |
$ |
10,753 |
|
$ |
10,183 |
|
$ |
23,356 |
|
$ |
20,383 |
Income tax expense |
|
3,877 |
|
|
2,963 |
|
|
8,207 |
|
|
5,100 |
Depreciation and amortization of property and equipment |
|
3,950 |
|
|
3,529 |
|
|
7,814 |
|
|
7,294 |
Amortization of intangible assets |
|
2,468 |
|
|
2,671 |
|
|
4,938 |
|
|
5,335 |
Stock-based compensation expense |
|
8,661 |
|
|
7,499 |
|
|
17,676 |
|
|
14,424 |
Realized loss from foreign currency on cash and investments
held |
|
1,327 |
|
|
349 |
|
|
859 |
|
|
638 |
Investment income |
|
(172) |
|
|
(79) |
|
|
(220) |
|
|
(176) |
Other |
|
— |
|
|
213 |
|
|
— |
|
|
(213) |
Adjusted EBITDA |
$ |
30,864 |
|
$ |
27,328 |
|
$ |
62,630 |
|
$ |
52,785 |
Adjusted EBITDA Margin |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
$ |
109,178 |
|
|
$ |
94,539 |
|
|
$ |
214,371 |
|
|
$ |
184,633 |
|
|
|
|
|
|
|
|
|
Net income |
|
10,753 |
|
|
|
10,183 |
|
|
|
23,356 |
|
|
|
20,383 |
|
Margin |
|
10 |
% |
|
|
11 |
% |
|
|
11 |
% |
|
|
11 |
% |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
30,864 |
|
|
|
27,328 |
|
|
|
62,630 |
|
|
|
52,785 |
|
Adjusted EBITDA Margin |
|
28 |
% |
|
|
29 |
% |
|
|
29 |
% |
|
|
29 |
% |
Non-GAAP Income |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Net income |
$ |
10,753 |
|
$ |
10,183 |
|
$ |
23,356 |
|
$ |
20,383 |
Stock-based compensation expense |
|
8,661 |
|
|
7,499 |
|
|
17,676 |
|
|
14,424 |
Amortization of intangible assets |
|
2,468 |
|
|
2,671 |
|
|
4,938 |
|
|
5,335 |
Realized loss from foreign currency on cash and investments
held |
|
1,327 |
|
|
349 |
|
|
859 |
|
|
638 |
Other |
|
— |
|
|
213 |
|
|
— |
|
|
(213) |
Income tax effects of adjustments |
|
(3,491) |
|
|
(3,999) |
|
|
(6,710) |
|
|
(7,974) |
Non-GAAP income |
$ |
19,718 |
|
$ |
16,916 |
|
$ |
40,119 |
|
$ |
32,593 |
Shares used to compute
non-GAAP income per share |
|
|
|
|
|
|
|
Basic |
|
36,085 |
|
|
35,903 |
|
|
36,110 |
|
|
35,828 |
Diluted |
|
36,862 |
|
|
36,753 |
|
|
36,897 |
|
|
36,741 |
Non-GAAP income per share |
|
|
|
|
|
|
|
Basic |
$ |
0.55 |
|
$ |
0.47 |
|
$ |
1.11 |
|
$ |
0.91 |
Diluted |
$ |
0.53 |
|
$ |
0.46 |
|
$ |
1.09 |
|
$ |
0.89 |
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