SPS Commerce (SPSC) AI Stock Analysis

• Market Cap: $5.04B
• Dividend Yield: N/A
• Average Volume (3M): 378.87K
• Price to Earnings (P/E): 65.6
• Beta (1Y): 1.38
• Revenue Growth: 18.78%
• EPS Growth: 15.01%
• Country: US
• Employees: 2,783
• Sector: Technology
• Sector Strength: 44
• Industry: Software - Infrastructure
• EPS (TTM): 2.03
• Shares Outstanding: 37,773,838
• 10 Day Avg. Volume: 352,206
• 30 Day Avg. Volume: 378,870
• PEG Ratio: 4.37
• Price to Book (P/B): N/A
• Price to Sales (P/S): 8.03
• Price to Cash Flow (P/CF): 23.00
• P/FCF Ratio: 25.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $197.38
• Price Target Upside: 47.85% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

SPS Commerce exhibits solid financial performance and a promising future growth outlook, driven by strategic acquisitions and strong revenue projections. However, technical indicators are currently negative, and the stock appears overvalued based on its P/E ratio. Despite these challenges, the company's stable financial footing and positive earnings guidance support a moderately positive stock score.

Positive Factors

Acquisition Strategy

Recent acquisitions are expected to enhance the platform strategy, making the synergetic product elements even more compelling for customers.

Revenue Growth

Analysts are optimistic about achieving double-digit organic revenue growth due to platform-driven cross sell motion and new European opportunities.

Total Addressable Market

The company provided an updated market analysis, effectively doubling the initial IPO TAM from 2010 to more than $11 billion, due to both market and platform expansion.

Negative Factors

Competition and Market Risks

Risks to the rating include competition, small-business exposure, and significant exposure to the retail sector.

Customer Growth

Customer growth remains muted with management expecting more limited organic additions.

Near-term Growth Expectations

Near-term growth expectations show a modest deceleration from over 14% to approximately 10.5%.

SPS Commerce Business Overview & Revenue Model

Company Description

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It offers solutions through the SPS Commerce, a cloud-based platform that enhances the way retailers, suppliers, grocers, distributors, and logistics firms manage and fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. The company also provides Fulfillment solution that provides fulfillment automation and replaces or augments an organization's existing staff and trading partner electronic communication infrastructure by enabling easy compliance with retailers' rulebooks, automatic, and digital exchange of information among numerous trading partners through various protocols, and greater visibility into the journey of an order; and Analytics solution, which consists of data analytics applications that enables customers to enhance their visibility across supply chains through greater analytics capabilities. In addition, it offers various complimentary products, such as assortment product, which enables accurate order management and rapid fulfillment; and community product that accelerates vendor onboarding and ensures trading partner adoption of new supply chain requirements. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

How the Company Makes Money

SPS Commerce generates revenue primarily through subscription fees for its cloud-based services, which include electronic data interchange (EDI) solutions, retail analytics, and other supply chain management tools. The company charges its customers, which consist of retailers, suppliers, distributors, and logistics companies, for access to its platform on a recurring basis. Additionally, SPS Commerce may earn revenue from professional services, such as implementation, training, and consulting, that help clients effectively utilize its solutions. Strategic partnerships and integrations with other technology providers and platforms also enhance the company's offerings and contribute to its revenue streams.

SPS Commerce Financial Statement Overview

Summary

SPS Commerce shows strong financial health with significant revenue growth of 18.78% and robust profitability metrics. The balance sheet is stable with low leverage, and cash flow generation remains strong, supporting business operations and growth initiatives.

Income Statement

SPS Commerce has demonstrated strong revenue growth, with a notable increase from $536.91 million in 2023 to $637.77 million in 2024, a 18.78% growth rate. Gross profit margin remains strong at 66.94%, and net profit margin improved to 12.08%. The EBIT margin is steady at 13.93%, reflecting solid operational efficiency. The company maintains robust profitability metrics, indicating a good competitive position within the industry.

Balance Sheet

The balance sheet of SPS Commerce is solid, characterized by a low debt-to-equity ratio of 0.01, indicating minimal leverage risk. The company exhibits a strong equity ratio of 82.87%, highlighting financial stability. Return on Equity (ROE) is impressive at 9.02%, reflecting efficient use of equity capital to generate profits. Overall, the balance sheet reflects a strong financial foundation with low leverage and high equity.

Cash Flow

SPS Commerce shows a robust cash flow position, with a substantial operating cash flow of $157.40 million in 2024. Free cash flow grew by 22.03% from 2023 to 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 2.04, demonstrating efficient conversion of income to cash. The company's cash flow statement reflects healthy liquidity and strong cash management practices.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
637.76M	536.91M	450.88M	385.28M	312.63M
	Gross Profit
427.05M	354.84M	297.81M	253.60M	212.79M
	EBIT
88.88M	77.25M	71.18M	55.09M	50.16M
	EBITDA
88.88M	112.00M	99.37M	80.00M	68.82M
	Net Income Common Stockholders
77.05M	65.82M	55.13M	44.60M	45.59M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
241.02M	275.44M	214.31M	257.31M	187.48M
	Total Assets
1.03B	823.84M	672.91M	615.85M	525.52M
	Total Debt
12.47M	14.03M	17.29M	20.53M	22.47M
	Net Debt
-228.55M	-205.05M	-145.61M	-187.02M	-127.22M
	Total Liabilities
176.54M	156.37M	135.84M	131.59M	104.80M
	Stockholders Equity
854.69M	667.48M	537.07M	484.26M	420.72M
Cash Flow		Free Cash Flow
137.35M	112.54M	80.17M	93.31M	72.09M
	Operating Cash Flow
157.40M	132.30M	100.05M	112.89M	88.56M
	Investing Cash Flow
-110.45M	-92.64M	-112.79M	-46.70M	-120.47M
	Financing Cash Flow
-23.03M	15.97M	-31.63M	-8.36M	2.33M

SPS Commerce Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 133.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPSC, the sentiment is Negative. The current price of 133.5 is above the 20-day moving average (MA) of 130.53, below the 50-day MA of 153.04, and below the 200-day MA of 181.38, indicating a neutral trend. The MACD of -4.09 indicates Negative momentum. The RSI at 42.48 is Neutral, neither overbought nor oversold. The STOCH value of 83.17 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SPSC.

SPS Commerce Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADBE	75 Outperform	$164.39B	25.40	47.28%	―	10.65%	44.84%
EBAY	73 Outperform	$31.30B	17.04	34.29%	1.61%	2.79%	-23.30%
MANH	72 Outperform	$10.60B	49.36	75.64%	―	12.23%	24.66%
SPSC	71 Outperform	$5.04B	65.63	10.12%	―	18.78%	15.01%
ORCL	67 Neutral	$395.03B	33.10	108.79%	1.14%	6.23%	12.37%
Sector *	58 Neutral	$21.03B	10.58	-16.29%	2.47%	4.38%	-23.63%

SPS Commerce Corporate Events

SPS Commerce Appoints Razat Gaurav to Board

On February 25, 2025, SPS Commerce’s Board of Directors expanded from seven to eight members, appointing Razat Gaurav as an independent director effective March 6, 2025. This strategic move comes as James Ramsey, a long-serving board member since 2014, announced his retirement and decision not to seek re-election at the 2025 annual meeting. Gaurav’s appointment and Ramsey’s retirement are part of the company’s ongoing efforts to strengthen its governance and strategic direction.

SPS Commerce Expands with Carbon6 Technologies Acquisition

SPS Commerce has entered into a merger agreement to acquire Carbon6 Technologies for approximately $210 million, combining cash and share considerations. The acquisition, aimed at enhancing SPS Commerce’s market position, involves issuing common stock to Carbon6 shareholders and includes regulatory conditions and lock-up agreements for stock transactions post-closing.