SPS Commerce (SPSC) AI Stock Analysis

• Market Cap: $5.30B
• Dividend Yield: N/A
• Average Volume (3M): 393.26K
• Price to Earnings (P/E): 65.3
• Beta (1Y): 1.15
• Revenue Growth: 19.46%
• EPS Growth: 16.20%
• Country: US
• Employees: 2,783
• Sector: Technology
• Sector Strength: 62
• Industry: Software - Infrastructure
• EPS (TTM): 2.14
• Shares Outstanding: 37,977,380
• 10 Day Avg. Volume: 343,160
• 30 Day Avg. Volume: 393,257
• PEG Ratio: 4.03
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.94
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 11.67
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $174.88
• Price Target Upside: 23.15% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

SPS Commerce demonstrates strong financial performance with consistent revenue growth and profitability. The stock's technical indicators suggest some caution due to potential downward trends. Valuation remains high with a notable P/E ratio, which may deter some investors. The recent earnings call provided positive guidance, although there are concerns regarding the analytics business and external economic factors.

Positive Factors

Earnings Performance

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

Strategic Expansion

The updated TAM analysis suggests a sustainable growth runway through a balanced mix of new logo activity and increased share of wallet.

Negative Factors

Growth Concerns

Longer-term questions remain relative to the steady-state organic growth profile of the business, which is likely to remain a structural overhang on shares.

Macro Challenges

Macro uncertainty negatively impacted Analytics more than expected, which reported a 2% year-over-year revenue decline.

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 performance with robust revenue and profit growth, efficient cost management, and a solid balance sheet. The company benefits from low leverage and strong cash generation capabilities, making it a strong player in the software infrastructure industry.

Income Statement

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

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

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.

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: Neutral
• Last Price: 142.00
• 50DMA: Positive
• 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 Neutral. The current price of 142 is above the 20-day moving average (MA) of 131.45, above the 50-day MA of 132.82, and below the 200-day MA of 175.86, indicating a neutral trend. The MACD of 0.26 indicates Negative momentum. The RSI at 58.46 is Neutral, neither overbought nor oversold. The STOCH value of 92.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SPSC.

SPS Commerce Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACIW	79 Outperform	$5.55B	27.58	14.78%	―	9.76%	73.38%
QLYS	76 Outperform	$4.59B	27.13	41.09%	―	10.40%	14.78%
SPSC	73 Outperform	$5.30B	65.26	10.13%	―	19.46%	16.20%
BOX	71 Outperform	$4.43B	22.95	189.40%	―	5.05%	103.11%
WEX	64 Neutral	$4.47B	17.38	18.71%	―	3.15%	21.82%
Sector *	59 Neutral	$10.72B	10.37	-6.60%	3.02%	7.37%	-11.29%
VRNS	56 Neutral	$4.72B	―	-20.26%	―	10.38%	6.88%

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.