SPS Commerce (SPSC) AI Stock Analysis

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SPS Commerce

(NASDAQ:SPSC)

Rating:66Neutral

Price Target:

$147.00

▲(9.05%Upside)

SPS Commerce's overall score is driven by its strong financial performance and positive earnings call sentiment. However, the high P/E ratio and bearish technical indicators suggest caution. The company's robust revenue growth and acquisition success are tempered by valuation concerns and technical weaknesses.

Positive Factors

Financial Performance

SPS Commerce reported a solid first quarter with total and recurring revenue growing 21% and 23%, respectively, approximately $2 million ahead of expectations.

Growth Strategy

Platform-driven cross sell motion and new European opportunities make analysts optimistic about achieving double-digit organic revenue growth.

Negative Factors

Growth Expectations

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

Market Challenges

Macro uncertainty negatively impacted Analytics more than expected, which reported a 2% Y/Y revenue decline.

SPS Commerce (SPSC) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.24B

Dividend YieldN/A

Average Volume (3M)270.63K

Price to Earnings (P/E)63.0

Beta (1Y)1.17

Revenue Growth19.46%

EPS Growth16.20%

CountryUS

Employees2,783

SectorTechnology

Sector Strength78

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)1.00

Shares Outstanding37,977,380

10 Day Avg. Volume381,207

30 Day Avg. Volume270,629

Financial Highlights & Ratios

PEG Ratio2.44

Price to Book (P/B)9.09

Price to Sales (P/S)0.00

P/FCF Ratio53.06

Enterprise Value/Market Cap0.34

Enterprise Value/Revenue0.71

Enterprise Value/Gross Profit3.98

Enterprise Value/Ebitda3.58

Forecast

1Y Price Target

$174.25

Price Target Upside29.27% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

SPS Commerce Business Overview & Revenue Model

Company DescriptionSPS Commerce, Inc. is a leading provider of cloud-based supply chain management solutions, focusing on enhancing the efficiency of retail, distribution, and manufacturing sectors. The company offers a comprehensive suite of products and services designed to optimize operations and improve collaboration among trading partners. Key offerings include electronic data interchange (EDI), order management, and analytics solutions, which enable businesses to streamline their supply chain processes and achieve greater agility in response to market demands.

How the Company Makes MoneySPS Commerce generates revenue primarily through subscription fees for its cloud-based services, which include EDI, order management, and analytics solutions. The company's revenue model is based on recurring revenue from its broad customer base, which spans various industries such as retail, distribution, and manufacturing. Additionally, SPS Commerce benefits from professional services fees for implementation, training, and support, enhancing customer retention and satisfaction. The company also cultivates significant partnerships with industry leaders and leverages these relationships to expand its market reach and drive revenue growth.

SPS Commerce Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: -3.04%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Positive

SPS Commerce reported a strong first quarter with significant revenue growth, successful acquisition integration, and a robust financial position. However, there are concerns about the slight decline in the analytics business and the potential impact of tariff uncertainties on future business activities. Despite these concerns, the overall sentiment remains positive given the consistent growth and proactive management strategies.

Q1-2025 Updates

Positive Updates

Strong First Quarter Revenue Growth

SPS Commerce reported a 21% increase in revenue, reaching $181.5 million, marking the 97th consecutive quarter of revenue growth. Recurring revenue grew 23% year over year.

Successful Acquisition of CarbonSix

The acquisition of CarbonSix closed in February, adding approximately 8,500 customers, exceeding the preliminary estimate of 6,500 customers.

Positive EBITDA Growth

Adjusted EBITDA increased 22% to $54.4 million compared to $44.4 million in Q1 of the previous year.

Strong Customer Base Expansion

The total number of recurring revenue customers in Q1 increased to approximately 54,150.

Robust Financial Position and Guidance

SPS Commerce ended the quarter with $95 million in cash and investments, and repurchased approximately $40 million of SPS shares. The company expects full-year 2025 revenue growth to remain unchanged, projecting 19% to 20% growth over 2024.

Negative Updates

Decline in Analytics Business

The analytics business experienced a slight decline, down approximately 2% year over year, impacted by economic uncertainty.

Potential Impact from Tariff Uncertainty

Uncertainty regarding tariffs is top of mind for customers, although it has not yet significantly impacted the pipeline or speed of enablement programs.

Limited Visibility on Second Half of 2025

While SPS Commerce maintains a positive outlook for the year, there is limited visibility and uncertainty regarding community enablement activity in the second half of 2025.

Company Guidance

During the SPS Commerce First Quarter FY 2025 Conference Call, the company provided detailed guidance on its expected financial performance. For the second quarter of 2025, SPS Commerce anticipates revenue in the range of $184.5 million to $186.2 million, representing a year-over-year growth of 20% to 21%. Adjusted EBITDA is projected to be between $53 million and $54.5 million, while fully diluted earnings per share are expected to range from $0.41 to $0.44. Additionally, non-GAAP diluted income per share is forecasted to be between $0.87 and $0.90. For the full year 2025, the company maintains its revenue growth outlook at 19% to 20%, with revenues anticipated between $758.5 million and $763 million. Adjusted EBITDA for the year is expected to grow by approximately 23% to 25%, reaching between $229.4 million and $232.9 million. Fully diluted earnings per share for the year are projected to be between $2.06 and $2.13, with non-GAAP diluted income per share expected to range from $3.86 to $3.93. Additionally, stock-based compensation, depreciation, and amortization expenses are forecasted at approximately $61.4 million, $23 million, and $38 million, respectively, for the year. The company reiterated its focus on automation and operational efficiencies across supply chains, emphasizing the resilience of its business model amid the current economic uncertainties.

SPS Commerce Financial Statement Overview

Summary

SPS Commerce shows strong financial performance with robust revenue growth, high profitability margins, and a solid balance sheet characterized by low leverage. The company's efficient cash flow conversion further underscores its financial health, although future capital expenditures need monitoring.

Income Statement

Very Positive

SPS Commerce has demonstrated strong revenue growth, with a TTM revenue increase of 5% compared to the previous year. The gross profit margin stands at 67%, indicating efficient cost management. The net profit margin is robust at 12.1%, supported by steady EBIT and EBITDA margins of 14.8% and 17.9% respectively. This performance indicates solid profitability and operational efficiency, typical for a mature software company.

Balance Sheet

Positive

The balance sheet of SPS Commerce reflects financial stability with a low debt-to-equity ratio of 0.013. The return on equity is a healthy 8.8%, showcasing effective management of shareholders' funds. The equity ratio is strong at 83%, indicating a well-capitalized structure with substantial equity backing. This balance sheet structure positions the company well against potential financial challenges.

Cash Flow

Positive

SPS Commerce reports a strong free cash flow with a growth rate of approximately 2.4% over the past year. The operating cash flow to net income ratio is 2.01, which highlights strong cash conversion capabilities. The free cash flow to net income ratio of 1.73 further underscores the company's efficiency in converting profits into cash. These metrics indicate a solid cash flow position, although future capital expenditures could impact growth.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
669.74M	637.76M	536.91M	450.88M	385.28M	312.63M
	Gross Profit
448.76M	427.05M	354.84M	297.81M	253.60M	212.79M
	EBIT
99.44M	88.88M	77.25M	71.18M	55.09M	50.16M
	EBITDA
135.81M	131.11M	112.00M	99.37M	80.00M	68.82M
	Net Income Common Stockholders
81.25M	77.05M	65.82M	55.13M	44.60M	45.59M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
233.45M	241.02M	275.44M	214.31M	257.31M	187.48M
	Total Assets
696.93M	1.03B	823.84M	672.91M	615.85M	525.52M
	Total Debt
16.11M	12.47M	14.03M	17.29M	20.53M	22.47M
	Net Debt
-166.19M	-228.55M	-205.05M	-145.61M	-187.02M	-127.22M
	Total Liabilities
131.04M	176.54M	156.37M	135.84M	131.59M	104.80M
	Stockholders Equity
565.89M	854.69M	667.48M	537.07M	484.26M	420.72M
Cash Flow		Free Cash Flow
140.65M	137.35M	112.54M	80.17M	93.31M	72.09M
	Operating Cash Flow
163.32M	157.40M	132.30M	100.05M	112.89M	88.56M
	Investing Cash Flow
-255.29M	-110.45M	-92.64M	-112.79M	-46.70M	-120.47M
	Financing Cash Flow
-47.09M	-23.03M	15.97M	-31.63M	-8.36M	2.33M

SPS Commerce Technical Analysis

Technical Analysis Sentiment

Negative

Last Price134.80

Price Trends

50DMA

139.49

Negative

100DMA

144.53

Negative

200DMA

166.50

Negative

Market Momentum

MACD

-1.14

Positive

RSI

40.16

Neutral

STOCH

9.41

Positive

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 134.8 is below the 20-day moving average (MA) of 142.91, below the 50-day MA of 139.49, and below the 200-day MA of 166.50, indicating a bearish trend. The MACD of -1.14 indicates Positive momentum. The RSI at 40.16 is Neutral, neither overbought nor oversold. The STOCH value of 9.41 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SPSC.

SPS Commerce Risk Analysis

SPS Commerce disclosed 28 risk factors in its most recent earnings report. SPS Commerce reported the most risks in the "Tech & Innovation" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 1 New Risks

We may face exposure to fluctuations in foreign currency exchange rates, which could affect our financial condition and results of operations. Q4, 2024

SPS Commerce Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BOX	78 Outperform	$5.19B	27.59	152.34%	―	4.88%	80.94%
QLYS	78 Outperform	$5.04B	28.36	40.23%	―	9.58%	12.41%
ACIW	74 Outperform	$4.92B	17.77	19.69%	―	13.11%	91.21%
WEX	69 Neutral	$4.80B	17.72	24.37%	―	0.90%	26.13%
SPSC	66 Neutral	$5.24B	63.05	10.13%	―	19.46%	16.20%
VRNS	64 Neutral	$5.52B	―	-22.21%	―	13.34%	13.71%
Sector *	62 Neutral	$11.80B	10.08	-7.46%	2.99%	7.37%	-8.21%

* Technology Sector Average

Performance Comparison

SPSC

SPS Commerce

134.80

-51.00

-27.45%

ACIW

ACI Worldwide

45.07

8.80

24.26%

WEX

137.65

-33.02

-19.35%

QLYS

Qualys

138.78

2.04

1.49%

VRNS

Varonis Systems

49.02

5.32

12.17%

BOX

Box

35.57

9.91

38.62%

SPS Commerce Corporate Events

Executive/Board ChangesShareholder Meetings

SPS Commerce Holds 2025 Annual Stockholders Meeting

Neutral

May 13, 2025

On May 13, 2025, SPS Commerce held its 2025 Annual Meeting of Stockholders where several key decisions were made. The stockholders elected directors to serve until the 2026 meeting, ratified KPMG LLP as the independent auditor for 2025, approved the compensation of named executive officers, and decided to hold annual Say-on-Pay votes. These decisions reflect the company’s commitment to maintaining consistent governance practices and ensuring transparency in executive compensation.

The most recent analyst rating on (SPSC) stock is a Buy with a $230.00 price target. To see the full list of analyst forecasts on SPS Commerce stock, see the SPSC Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.