SPS Commerce ((SPSC)) has held its Q4 earnings call. Read on for the main highlights of the call.
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SPS Commerce’s latest earnings call paints a picture of robust performance throughout 2024, marked by impressive revenue growth, strategic acquisitions, and fruitful customer relationships. The company has identified a vast global market potential and remains optimistic about further revenue and EBITDA growth in 2025, despite some concerns around analytics growth moderation and the looming risk of international tariffs.
Strong Revenue Growth
In 2024, SPS Commerce demonstrated significant financial prowess with a 19% increase in revenue, reaching $637.8 million. Recurring revenue, a key indicator of business stability, saw a 20% rise, reflecting the company’s ability to maintain and grow its customer base effectively.
Strategic Acquisitions
SPS Commerce strengthened its market position through strategic acquisitions, including Vision33’s SAP Business One integration technology, Traverse Systems, SupplyPike, and Carbon6. These acquisitions have expanded the company’s product portfolio and bolstered its network, setting the stage for enhanced competitive edge.
Customer Success Stories
The company highlighted successful partnerships with major clients such as Canadian Tire and GNC. These collaborations have led to enhanced supply chain operations and improved compliance rates, showcasing SPS Commerce’s commitment to delivering value to its clients.
Global Market Opportunity
SPS Commerce identified an $11.1 billion global total addressable market, with $6.5 billion coming from the U.S. This substantial market opportunity underscores the company’s potential for further expansion and growth.
Positive Financial Outlook
Looking ahead, SPS Commerce projects revenue growth of 19% to 20% for 2025, with adjusted EBITDA expected to increase by 22% to 24%. This positive outlook reflects the company’s confidence in sustaining its growth trajectory.
Moderation in Analytics Growth
The company noted a slowdown in analytics growth to 8%, down from 10% in previous years. This moderation is partly attributed to macroeconomic factors influencing customer purchasing habits, which may continue to present challenges.
Potential Impact of International Tariffs
SPS Commerce expressed concerns over the uncertainty of international tariffs, which could affect digital connection needs and potentially impact its customers with international exposure. This remains a risk factor to monitor moving forward.
Guidance for 2025
In its forward-looking guidance, SPS Commerce projected Q1 2025 revenue to range between $178.5 million and $180 million, with a 19% to 20% year-over-year growth. Adjusted EBITDA is expected to be between $49.5 million and $50.5 million. For the full year 2025, the company anticipates revenue between $758 million and $763 million, along with adjusted EBITDA growth of 22% to 24%. Non-GAAP diluted income per share is expected to be between $3.78 and $3.84, reflecting continued financial strength.
In summary, SPS Commerce’s earnings call highlighted a strong performance in 2024, with strategic initiatives and partnerships driving growth. The company is poised for continued success in 2025, although it remains vigilant of potential challenges such as analytics growth moderation and international tariffs. Investors and industry watchers will find the company’s robust outlook and strategic direction promising for future developments.
