Loading, Please Wait...

CST: 12/11/2019 02:00:09   

SPS Commerce Reports First Quarter 2019 Financial Results

200 Days ago

Company delivers 73rd consecutive quarter of topline growth, with 14% growth in recurring revenue over 2018

MINNEAPOLIS, April 25, 2019 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the first quarter ended March 31, 2019.

Revenue was $66.9 million in the first quarter of 2019, compared to $59.1 million in the first quarter of 2018, reflecting 13% growth in revenue from the first quarter of 2018. Recurring revenue grew 14% from the first quarter of 2018. 

Net income in the first quarter of 2019 was $6.8 million or $0.38 per diluted share, compared to net income of $3.3 million or $0.19 per diluted share, in the first quarter of 2018. Non-GAAP income per diluted share was $0.60 compared to non-GAAP income per diluted share of $0.39 in the first quarter of 2018.

Adjusted EBITDA for the first quarter of 2019 increased 51% to $16.4 million compared to the first quarter of 2018.

“SPS Commerce’s differentiated value proposition of leading technology, scale and industry expertise position the company to gain market share as the retail industry continues its digital transformation journey,” said Archie Black, President and CEO of SPS Commerce.  “As retail trends fuel the need for business process automation and increased efficiency, SPS Commerce continues to redefine EDI solutions and full-scale retail change management.”

“We posted strong performance in the first quarter of 2019, continuing to execute to our long-term financial targets while growing our network of customers,” said Kim Nelson, CFO of SPS Commerce.

Guidance

For the second quarter of 2019, revenue is expected to be in the range of $67.7 million to $68.2 million.  Second quarter net income per diluted share is expected to be in the range of $0.33 to $0.35 with fully diluted weighted average shares outstanding of approximately 18.0 million shares.  Non-GAAP income per diluted share is expected to be in the range of $0.51 to $0.53.  Adjusted EBITDA is expected to be in the range of $15.8 million to $16.3 million.  Non-cash, share-based compensation expense is expected to be approximately $3.3 million, depreciation expense is expected to be approximately $2.8 million and amortization expense is expected to be approximately $1.3 million.

For the full year of 2019, revenue is expected to be in the range of $275.0 million to $276.5 million, representing approximately 11% growth over 2018. Full year net income per diluted share is expected to be in the range of $1.39 to $1.45 with fully diluted weighted average shares outstanding of approximately 18.0 million shares.   Non-GAAP income per diluted share is expected to be in the range of $2.16 to $2.22. Adjusted EBITDA is expected to be in the range of $65.0 to $66.5 million, representing approximately 27% to 30% growth over 2018. Non-cash, share-based compensation expense is expected to be approximately $15.5 million, depreciation expense is expected to be approximately $11.3 million and amortization expense is expected to be approximately $5.2 million. 

Quarterly Conference Call

SPS Commerce will discuss its quarterly 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 # 3283868 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 perfects the power of trading partner relationships with the industry's most broadly adopted, retail cloud services platform. As a leader in cloud-based supply chain management solutions, we provide proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. SPS Commerce has achieved 73 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, please contact SPS Commerce at 866-245-8100 or visit www.spscommerce.com.

SPS COMMERCE, SPS, SPS logo, RETAIL UNIVERSE, 1=INFINITY logo, AS THE NETWORK GROWS, SO DOES YOUR OPPORTUNITY, INFINITE RETAIL POWER, RETAIL UNIVERSE are marks of SPS Commerce, Inc. and Registered in the U.S. Patent and Trademark Office. RSX, IN:FLUENCE, and others are further marks of SPS Commerce

Use of Non-GAAP Financial Measures

To supplement its financial statements, SPS Commerce also provides investors with Adjusted EBITDA 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 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. It uses Adjusted EBITDA for purposes of determining executive and senior management incentive compensation. These measures are also presented to the company's board of directors.

Adjusted EBITDA consists of net income adjusted for depreciation and amortization, interest expense, interest income, income tax expense, stock-based compensation expense, and other adjustments as necessary for a fair presentation. SPS Commerce uses Adjusted EBITDA as a measure of operating performance because it assists the company in comparing performance on a consistent basis, as it removes from operating results the impact of the company's capital structure. SPS Commerce believes Adjusted EBITDA is useful to an investor in evaluating the company's operating performance because it is 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 plus stock-based compensation expense, amortization expense related to intangible assets, 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 includes an adjustment to non-GAAP income to reflect the income tax effects of the adjustments to GAAP net income. 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.

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.  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, our positioning for the future and our performance for the second quarter and full year of 2019, 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, 2018, 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 share amounts)  
                 
    March 31,     December 31,  
    2019     2018  
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 143,715     $ 133,859  
Short-term investments     41,683       44,537  
Accounts receivable, less allowance for doubtful accounts of $1,478 and $1,392, respectively     28,301       27,488  
Deferred costs     34,692       34,502  
Other current assets     8,858       9,229  
Total current assets     257,249       249,615  
PROPERTY AND EQUIPMENT, less accumulated depreciation of $43,702 and $41,175, respectively     20,710       20,957  
OPERATING LEASE RIGHT-OF-USE ASSET     15,234        
GOODWILL     70,075       69,658  
INTANGIBLE ASSETS, net     21,572       22,741  
OTHER ASSETS                
Deferred costs     11,199       10,973  
Deferred income tax asset     9,528       10,456  
Other assets     1,630       1,723  
Total assets   $ 407,197     $ 386,123  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES                
Accounts payable   $ 4,391     $ 4,440  
Accrued compensation     11,974       20,415  
Accrued expenses     4,619       4,558  
Deferred revenue     28,889       25,328  
Deferred rent           1,781  
Operating lease liabilities     3,509        
Total current liabilities     53,382       56,522  
OTHER LIABILITIES                
Deferred revenue     2,649       2,512  
Deferred rent           5,371  
Operating lease liabilities     17,723        
Deferred income tax liability     1,315       1,376  
Other non-current liabilities     1,424       1,368  
Total liabilities     76,493       67,149  
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; 55,000,000 shares authorized; 17,913,306 and 17,757,628 shares issued; and 17,467,682 and 17,345,736 outstanding, respectively     18       18  
Treasury stock, at cost; 445,624 and 411,892 shares, respectively     (28,645 )     (25,679 )
Additional paid-in capital     339,730       332,592  
Retained earnings     22,074       15,261  
Accumulated other comprehensive loss     (2,473 )     (3,218 )
Total stockholders’ equity     330,704       318,974  
Total liabilities and stockholders’ equity   $ 407,197     $ 386,123  
                 
Subject to reclassification                


SPS COMMERCE, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(Unaudited; in thousands, except per share amounts)  
                 
    Three Months Ended  
    March 31,  
    2019     2018  
Revenues   $ 66,934     $ 59,092  
Cost of revenues     21,367       19,758  
Gross profit     45,567       39,334  
Operating expenses                
Sales and marketing     17,922       18,647  
Research and development     6,192       5,132  
General and administrative     12,770       10,130  
Amortization of intangible assets     1,304       1,125  
Total operating expenses     38,188       35,034  
Income from operations     7,379       4,300  
Other income (expense)                
Interest income, net     577       414  
Other expense, net     (47 )     (154 )
Change in earn-out liability     (56 )      
Total other income, net     474       260  
Income before income taxes     7,853       4,560  
Income tax expense     1,040       1,306  
Net income   $ 6,813     $ 3,254  
                 
Net income per share                
Basic   $ 0.39     $ 0.19  
Diluted   $ 0.38     $ 0.19  
                 
Weighted average common shares used to compute net income per share                
Basic     17,471       17,093  
Diluted     17,992       17,307  


SPS COMMERCE, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited; in thousands)  
    Three months ended  
    March 31,  
    2019     2018  
Cash flows from operating activities                
Net income   $ 6,813     $ 3,254  
Reconciliation of net income to net cash provided by operating activities                
Deferred income taxes     838       1,020  
Change in earn-out liability     56        
Depreciation and amortization of property and equipment     2,637       2,083  
Amortization of intangible assets     1,304       1,125  
Provision for doubtful accounts     655       410  
Stock-based compensation     5,294       3,533  
Other, net     (240 )     (32 )
Changes in assets and liabilities                
Accounts receivable     (1,328 )     (1,520 )
Deferred costs     (414 )     (1,628 )
Other current and non-current assets     (337 )     367  
Accounts payable     353       317  
Accrued compensation     (8,843 )     (3,939 )
Accrued expenses     60       (592 )
Deferred revenue     3,698       3,680  
Deferred rent           1,271  
Operating leases     (345 )      
Net cash provided by operating activities     10,201       9,349  
Cash flows from investing activities                
Purchases of property and equipment     (2,899 )     (3,884 )
Purchases of investments     (12,447 )     (19,927 )
Maturities of investments     15,225       17,500  
Acquisitions of businesses and intangible assets, net of cash acquired           (381 )
Net cash used in investing activities     (121 )     (6,692 )
Cash flows from financing activities                
Repurchases of common stock     (2,966 )     (5,871 )
Net proceeds from exercise of options to purchase common stock     2,472       715  
Net cash used in financing activities     (494 )     (5,156 )
Effect of foreign currency exchange rate changes     270       (81 )
Net increase (decrease) in cash and cash equivalents     9,856       (2,580 )
Cash and cash equivalents at beginning of period     133,859       123,127  
Cash and cash equivalents at end of period   $ 143,715     $ 120,547  
                 
Subject to reclassification                


SPS COMMERCE, INC.  
NON-GAAP RECONCILIATION  
(Unaudited; in thousands)  
                 
    Three Months Ended  
    March 31,  
    2019     2018  
Net income   $ 6,813     $ 3,254  
Depreciation and amortization of property                
and equipment     2,637       2,083  
Amortization of intangible assets     1,304       1,125  
Interest income, net     (577 )     (414 )
Income tax expense     1,040       1,306  
Stock-based compensation expense     5,294       3,533  
Other     (61 )     -  
Adjusted EBITDA   $ 16,450     $ 10,887  
                 
Net income   $ 6,813     $ 3,254  
Stock-based compensation expense     5,294       3,533  
Amortization of intangible assets     1,304       1,125  
Income tax effects of adjustments     (2,643 )     (1,153 )
Other     (61 )     -  
Non-GAAP income   $ 10,707     $ 6,759  
                 
Shares used to compute non-GAAP income per share                
Basic     17,471       17,093  
Diluted     17,992       17,307  
                 
Non-GAAP income per share                
Basic   $ 0.61     $ 0.40  
Diluted   $ 0.60     $ 0.39  

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

SPS-F

Is your business listed correctly on America’s largest city directory network of 1,000 portals?