SPS Commerce Reports Second Quarter 2021 Financial Results

Thursday, 29. July 2021 22:07

MINNEAPOLIS, July 29, 2021 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the second quarter ended June 30, 2021.

Revenue was $94.5 million in the second quarter of 2021, compared to $75.6 million in the second quarter of 2020, reflecting 25% growth in revenue from the second quarter of 2020. Recurring revenue grew 22% from the second quarter of 2020.

Net income in the second quarter of 2021 was $10.2 million or $0.28 per diluted share, compared to net income of $11.2 million or $0.31 per diluted share, in the second quarter of 2020. Non-GAAP net income per diluted share was $0.46, compared to non-GAAP net income per diluted share of $0.37 in the second quarter of 2020. Adjusted EBITDA for the second quarter of 2021 increased 34% to $27.3 million compared to the second quarter of 2020.

“SPS Fulfillment is a proven tool that unlocks digital transformation potential for trading partners across all industries,” said Archie Black, President and CEO of SPS Commerce. “Omnichannel retail continues to fuel demand for SPS’ solutions, while growing our addressable market. This is a very exciting time for SPS Commerce.”  

“SPS Commerce continues to deliver strong results driven by accelerating demand for our fulfillment solution, as retailers and suppliers adapt to new norms of consumers’ shopping preferences,” said Kim Nelson, CFO of SPS Commerce.

Guidance

Third quarter 2021 revenue is expected to be in the range of $96.7 million to $97.5 million. Third quarter net income per diluted share is expected to be in the range of $0.21 to $0.23 with fully diluted weighted average shares outstanding of approximately 37.0 million shares. Non-GAAP net income per diluted share is expected to be in the range of $0.40 to $0.41. Adjusted EBITDA is expected to be in the range of $25.3 million to $26.0 million. Non-cash, share-based compensation expense is expected to be approximately $7.0 million, depreciation expense is expected to be approximately $4.0 million and amortization expense is expected to be approximately $2.7 million.

For the full year of 2021, revenue is expected to be in the range of $380.6 million to $382.1 million, representing 22% growth over 2020. Full year net income per diluted share is expected to be in the range of $1.01 to $1.03, with fully diluted weighted average shares outstanding of approximately 36.9 million shares. Non-GAAP income per diluted share is expected to be in the range of $1.68 to $1.71. Adjusted EBITDA is expected to be in the range of $104.0 to $105.3 million, representing 20% to 21% growth over 2020. Non-cash, share-based compensation expense is expected to be approximately $27.6 million, depreciation expense is expected to be approximately $15.6 million and amortization expense is expected to be approximately $10.5 million.

Quarterly Conference Call

SPS Commerce will discuss its quarterly and annual results today via teleconference at 3:30 p.m. CT (4:30 p.m. ET). To access the call, please dial (877) 312-7508, or outside the U.S. (253) 237-1184, with Conference ID #7578057 at least five minutes prior to the 3:30 p.m. CT start time. A live webcast of the call will also be available at http://investors.spscommerce.com under the Events and Presentations menu. The replay will also be available on our website at http://investors.spscommerce.com.

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 95,000 companies in retail, distribution, grocery and e-commerce have chosen SPS as their retail network. SPS has achieved 82 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 its financial statements, SPS Commerce also provides investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP net income per share, which are non-GAAP financial measures. SPS Commerce believes that these non-GAAP measures provide useful information to management, our board of directors, and investors regarding certain financial and business trends relating to its financial condition and results of operations. SPS Commerce's management uses these non-GAAP measures to compare the company's 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.

Adjusted EBITDA consists of net income adjusted for depreciation and amortization expense, investment income or loss, realized gain or loss from foreign currency on cash and investments held, income tax expense, stock-based compensation expense, 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 consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain or loss from foreign currency on cash and investments held, and other adjustments as necessary for a fair presentation, divided by the weighted average number of shares of common 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 these tax effects, SPS Commerce recalculates income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments (e.g., stock-based compensation expense). 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.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the company's financial statements and are subject to inherent limitations. SPS Commerce urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release.

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 2021, 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, 2020, 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.

SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(Unaudited; in thousands, except shares) 
         
  June 30,  December 31, 
  2021  2020 
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents $184,367  $149,692 
Short-term investments  48,999   37,786 
Accounts receivable  42,191   37,811 
Allowance for credit losses  (4,255)  (4,233)
Accounts receivable, net  37,936   33,578 
Deferred costs  40,149   37,988 
Other assets  11,711   12,312 
Total current assets  323,162   271,356 
PROPERTY AND EQUIPMENT, less accumulated depreciation of $67,074 and $59,152, respectively  29,046   26,432 
OPERATING LEASE RIGHT-OF-USE ASSETS  13,352   15,581 
GOODWILL  135,354   134,853 
INTANGIBLE ASSETS, net  54,950   60,230 
INVESTMENTS     2,500 
OTHER ASSETS        
Deferred costs, non-current  13,692   12,607 
Deferred income tax assets  246   194 
Other assets, non-current  2,476   2,705 
Total assets $572,278  $526,458 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable $5,942  $5,354 
Accrued compensation  27,469   22,872 
Accrued expenses  5,221   11,161 
Deferred revenue  48,845   37,947 
Operating lease liabilities  3,960   2,798 
Total current liabilities  91,437   80,132 
OTHER LIABILITIES        
Deferred revenue, non-current  4,991   2,996 
Operating lease liabilities, non-current  17,733   19,672 
Deferred income tax liabilities  3,368   2,937 
Total liabilities  117,529   105,737 
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; 37,536,118 and 37,100,467 shares issued; and 35,859,353 and 35,487,217 outstanding, respectively  38   37 
Treasury stock, at cost; 1,676,765 and 1,613,250 shares, respectively  (71,697)  (65,247)
Additional paid-in capital  413,182   393,462 
Retained earnings  113,873   93,490 
Accumulated other comprehensive loss  (647)  (1,021)
Total stockholders’ equity  454,749   420,721 
Total liabilities and stockholders’ equity $572,278  $526,458 
         


SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(Unaudited; in thousands, except per share amounts) 
                 
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2021  2020  2021  2020 
Revenues $94,539  $75,573  $184,633  $149,765 
Cost of revenues  31,730   24,326   61,700   47,870 
Gross profit  62,809   51,247   122,933   101,895 
Operating expenses                
Sales and marketing  21,952   18,611   43,307   36,910 
Research and development  8,899   7,466   17,605   15,034 
General and administrative  15,758   12,743   30,495   24,652 
Amortization of intangible assets  2,671   1,316   5,335   2,652 
Total operating expenses  49,280   40,136   96,742   79,248 
Income from operations  13,529   11,111   26,191   22,647 
Other income (expense), net  (383)  1,468   (708)  795 
Income before income taxes  13,146   12,579   25,483   23,442 
Income tax expense  2,963   1,385   5,100   2,733 
Net income $10,183  $11,194  $20,383  $20,709 
                 
Net income per share                
Basic $0.28  $0.32  $0.57  $0.59 
Diluted $0.28  $0.31  $0.55  $0.58 
                 
Weighted average common shares used to compute net income per share                
Basic  35,903   35,030   35,828   35,051 
Diluted  36,753   36,016   36,741   35,995 

Per share amounts may not foot due to rounding.        

SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited; in thousands) 
         
  Six Months Ended 
  June 30, 
  2021  2020 
Cash flows from operating activities        
Net income $20,383  $20,709 
Reconciliation of net income to net cash provided by operating activities        
Deferred income taxes  351   1,443 
Change in earn-out liability     72 
Depreciation and amortization of property and equipment  7,294   6,276 
Amortization of intangible assets  5,335   2,652 
Provision for credit losses  2,831   3,020 
Stock-based compensation  14,424   9,353 
Other, net  170   (129)
Changes in assets and liabilities        
Accounts receivable  (6,945)  (7,071)
Deferred costs  (3,338)  275 
Other current and non-current assets  (1,201)  3,141 
Accounts payable  (147)  321 
Accrued compensation  3,246   (6,166)
Accrued expenses  (2,087)  (964)
Deferred revenue  12,893   4,705 
Operating leases  1,449   (842)
Net cash provided by operating activities  54,658   36,795 
Cash flows from investing activities        
Purchases of property and equipment  (8,738)  (8,396)
Purchases of investments  (44,034)  (55,144)
Maturities of investments  35,000   31,050 
Net cash used in investing activities  (17,772)  (32,490)
Cash flows from financing activities        
Repurchases of common stock  (6,450)  (18,950)
Net proceeds from exercise of options to purchase common stock  4,030   9,426 
Net proceeds from employee stock purchase plan  2,186   1,550 
Payments for contingent consideration  (2,042)  (688)
Net cash used in financing activities  (2,276)  (8,662)
Effect of foreign currency exchange rate changes  65   (45)
Net increase (decrease) in cash and cash equivalents  34,675   (4,402)
Cash and cash equivalents at beginning of period  149,692   179,252 
Cash and cash equivalents at end of period $184,367  $174,850 
         
         


SPS COMMERCE, INC. 
NON-GAAP RECONCILIATION 
(Unaudited; in thousands, except per share amounts) 
                 
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2021  2020  2021  2020 
                 
Adjusted EBITDA 
Net income $10,183  $11,194  $20,383  $20,709 
Depreciation and amortization of property                
and equipment  3,529   3,138   7,294   6,276 
Amortization of intangible assets  2,671   1,316   5,335   2,652 
Interest income  (79)  (332)  (176)  (972)
Realized (gain) loss from foreign currency on cash and investments held  349   (1,370)  638   (127)
Income tax expense  2,963   1,385   5,100   2,733 
Stock-based compensation expense  7,499   5,009   14,424   9,353 
Other  213   82   (213)  154 
Adjusted EBITDA $27,328  $20,422  $52,785  $40,778 
                 
Adjusted EBITDA Margin 
Net income $10,183  $11,194  $20,383  $20,709 
Revenue  94,539   75,573   184,633   149,765 
Margin  11%  15%  11%  14%
                 
Adjusted EBITDA $27,328  $20,422  $52,785  $40,778 
Revenue  94,539   75,573   184,633   149,765 
Adjusted EBITDA Margin  29%  27%  29%  27%
                 
Non-GAAP Income 
Net income $10,183  $11,194  $20,383  $20,709 
Stock-based compensation expense  7,499   5,009   14,424   9,353 
Amortization of intangible assets  2,671   1,316   5,335   2,652 
Realized (gain) loss from foreign currency on cash and investments held  349   (1,370)  638   (127)
Other  213   82   (213)  154 
Income tax effects of adjustments  (3,999)  (2,886)  (7,974)  (5,912)
Non-GAAP income $16,916  $13,345  $32,593  $26,829 
                 
Shares used to compute non-GAAP income per share                
Basic  35,903   35,030   35,828   35,051 
Diluted  36,753   36,016   36,741   35,995 
                 
Non-GAAP income per share                
Basic $0.47  $0.38  $0.91  $0.77 
Diluted $0.46  $0.37  $0.89  $0.75 

Per share amounts may not foot due to rounding.   

Contact:
Investor Relations
The Blueshirt Group
Irmina Blaszczyk
Lisa Laukkanen
SPSC@blueshirtgroup.com
415-217-4962  


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