MINNEAPOLIS, April 27, 2017 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq:SPSC), a leader in retail cloud services, today announced financial results for the first quarter ended March 31, 2017.

Revenue was $51.9 million in the first quarter of 2017, compared to $45.6 million in the first quarter of 2016, reflecting 14% growth in revenue from the first quarter of 2016. Recurring revenue grew 15% from the first quarter of 2016.

Net income in the first quarter of 2017 was $3.0 million or $0.17 per diluted share, compared to net income of $1.0 million or $0.06 per diluted share, in the first quarter of 2016. Non-GAAP income per diluted share was $0.25 compared to non-GAAP income per diluted share of $0.16 in the first quarter of 2016. Non-GAAP income per diluted share now reflects an adjustment for the tax effects of the add-back of share-based compensation and the amortization of intangibles to non-GAAP income. Detail on retrospective tax effects on non-GAAP income for historical periods that were originally presented without this adjustment can be found on the financial data sheet posted at investors.spscommerce.com.

Adjusted EBITDA for the first quarter of 2017 increased 43% to $8.5 million compared to the first quarter of 2016.

"We had a strong start to 2017. Our solid first quarter performance was driven by the continued growth of the SPS Commerce network and demand for our comprehensive cloud based platform," said Archie Black, President and CEO of SPS Commerce. "The complexity of retail coupled with constantly evolving consumer demands make it imperative that retailers and suppliers achieve real-time collaboration to stay ahead of the competitive curve. Our technology platform and deep retail expertise enable us to take advantage of this evolution and grow our market leadership." 

"In the first quarter, we continued to expand the network, add customers and grow wallet share," said Kim Nelson, CFO of SPS Commerce.  "Looking to the rest of the year, we will continue to leverage our leadership position in the retail ecosystem to go after the large opportunity in front of us."

Guidance

For the second quarter of 2017, revenue is expected to be in the range of $53.4 million to $53.9 million.  Second quarter net income per diluted share is expected to be in the range of $0.06 to $0.07 with fully diluted weighted average shares outstanding of approximately 17.7 million shares.  Non-GAAP income per diluted share is expected to be in the range of $0.18 to $0.20.  Adjusted EBITDA is expected to be in the range of $7.3 million to $7.8 million.  Non-cash, share-based compensation expense is expected to be approximately $2.5 million, depreciation expense is expected to be approximately $2.0 million and amortization expense is expected to be approximately $1.2 million.

For the full year of 2017, revenue is expected to be in the range of $220 million to $222 million, representing approximately 14% to 15% growth over 2016. Full year net income per diluted share is expected to be in the range of $0.36 to $0.39 with fully diluted weighted average shares outstanding of approximately 17.7 million shares.   Non-GAAP income per diluted share is expected to be in the range of $0.83 to $0.85. Adjusted EBITDA is expected to be in the range of $31.8 to $32.5 million. Non-cash, share-based compensation expense is expected to be approximately $10.1 million, depreciation expense is expected to be approximately $8.3 million and amortization expense is expected to be approximately $4.9 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#    99462980 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 investors.spscommerce.com under the Events and Presentations menu.  The replay will also be available at 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 65 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, Inc. These marks may be registered or otherwise protected in other countries.

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Use of Non-GAAP Financial Measures

To supplement its financial statements, SPS Commerce also provides investors with Adjusted EBITDA and non-GAAP 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.

EBITDA consists of net income plus depreciation and amortization, interest expense, interest income, income tax expense and other adjustments as necessary for a fair presentation. Adjusted EBITDA consists of EBITDA plus non-cash, stock-based compensation expense. 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 non-cash, stock-based compensation expense and amortization expense related to intangible assets 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.

Additionally, pursuant to recent Compliance and Disclosure Interpretations published by the U.S. Securities and Exchange Commission in May 2016 related to the use of non-GAAP financial measures, SPS Commerce now 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, the company recalculates income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments.  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. Details of the impact on prior year periods are included in the financial data sheet posted to investors.spscommerce.com.

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 first quarter and full year of 2017, 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, 2016, 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,  
      2017       2016  
         
ASSETS        
         
CURRENT ASSETS        
Cash and cash equivalents   $ 128,707     $ 115,877  
Short-term marketable securities     25,550       23,076  
Accounts receivable, less allowance for doubtful accounts of $597 and $515, respectively     22,683       20,746  
Deferred costs     20,908       19,224  
Other current assets     6,992       7,010  
Total current assets     204,840       185,933  
         
PROPERTY AND EQUIPMENT, net     15,066       15,314  
GOODWILL     50,289       49,777  
INTANGIBLE ASSETS, net     19,389       19,788  
MARKETABLE SECURITIES, non-current     2,503       7,494  
OTHER ASSETS        
Deferred costs, non-current     6,051       6,086  
Deferred income tax asset, non-current     28,408       12,446  
Other non-current assets     1,372       1,527  
Total assets   $ 327,918     $ 298,365  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
CURRENT LIABILITIES        
Accounts payable   $ 3,580     $ 2,302  
Accrued compensation     12,272       13,740  
Accrued expenses     4,459       3,508  
Deferred revenue     15,803       11,055  
Deferred rent     1,504       1,556  
Total current liabilities     37,618       32,161  
         
OTHER LIABILITIES        
Deferred revenue, non-current     11,087       10,847  
Deferred rent, non-current     3,912       4,179  
Deferred income tax liability, non-current     1,895       1,911  
Total liabilities     54,512       49,098  
         
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; 17,200,526 and 17,081,145 shares issued and outstanding, respectively     17       17  
Additional paid-in capital     289,652       286,315  
Accumulated deficit     (14,490 )     (33,739 )
Accumulated other comprehensive loss     (1,773 )     (3,326 )
Total stockholders' equity     273,406       249,267  
Total liabilities and stockholders' equity   $ 327,918     $ 298,365  
                 

SPS COMMERCE, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(Unaudited; in thousands, except per share amounts)
           
      Three Months Ended    
      March 31,    
      2017       2016    
           
Revenues   $ 51,932     $ 45,599    
Cost of revenues     17,330       14,881    
Gross profit     34,602       30,718    
Operating expenses          
Sales and marketing     17,079       15,889    
Research and development     5,105       5,069    
General and administrative     7,827       7,285    
Amortization of intangible assets     1,215       1,161    
Total operating expenses     31,226       29,404    
Income from operations     3,376       1,314    
Other income (expense)          
Interest income, net     191       145    
Other income (expense), net     (60 )     293    
Total other income (expense), net     131       438    
Income before income taxes     3,507       1,752    
Income tax expense     (536 )     (708 )  
Net income   $ 2,971     $ 1,044    
           
Net income per share          
Basic   $ 0.17     $ 0.06    
Diluted   $ 0.17     $ 0.06    
Weighted average common shares used to compute net income per share          
Basic     17,154       16,783    
Diluted     17,393       17,029    

 
SPS COMMERCE, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited; in thousands)
         
      Three Months Ended  
      March 31,  
      2017       2016  
         
Cash flows from operating activities        
Net income   $ 2,971     $ 1,044  
Reconciliation of net income to net cash provided by operating activities        
Deferred income taxes     310       (302 )
Share based earn-out liability     -       (365 )
Depreciation and amortization of property and equipment     1,691       1,626  
Amortization of intangible assets     1,215       1,161  
Provision for doubtful accounts     332       304  
Stock-based compensation     2,300       1,927  
Other, net     (25 )     -  
Changes in assets and liabilities, net of effect of acquisition        
Accounts receivable     (2,201 )     (2,189 )
Deferred costs     (1,649 )     (765 )
Other current and non-current assets     180       99  
Accounts payable     1,169       1,694  
Accrued compensation     (1,508 )     (319 )
Accrued expenses     945       (90 )
Deferred revenue     4,988       3,019  
Deferred rent     (319 )     67  
Net cash provided by operating activities     10,399       6,911  
Cash flows from investing activities        
Purchases of property and equipment     (1,299 )     (2,116 )
Purchases of marketable securities     (4,995 )     (2,495 )
Maturities of marketable securities     7,500       2,500  
Acquisitions of businesses and intangible assets, net of cash acquired     (500 )     (17,942 )
Net cash provided by (used in) investing activities     706       (20,053 )
Cash flows from financing activities        
Net proceeds from exercise of options to purchase common stock     1,037       1,069  
Excess tax benefit from exercise of options to purchase common stock     -       1,021  
Net cash provided by financing activities     1,037       2,090  
Effect of foreign currency exchange rate changes     688       403  
Net increase (decrease) in cash and cash equivalents     12,830       (10,649 )
Cash and cash equivalents at beginning of period     115,877       121,538  
Cash and cash equivalents at end of period   $ 128,707     $ 110,889  
 

 
  SPS COMMERCE, INC.  
  NON-GAAP RECONCILIATION  
(Unaudited; in thousands, except per share amounts)
             
        Three Months Ended    
        March 31,    
        2017       2016    
             
Net income     $ 2,971     $ 1,044    
Depreciation and amortization of property          
and equipment   1,691       1,626    
Amortization of intangible assets     1,215       1,161    
Interest income, net     (191 )     (145 )  
Income tax expense     536       708    
Other     -       (365 )  
             
EBITDA       6,222       4,029    
Stock-based compensation expense     2,300       1,927    
             
Adjusted EBITDA   $ 8,522     $ 5,956    
             
Net income     $ 2,971     $ 1,044    
Stock-based compensation expense     2,300       1,927    
Amortization of intangible assets     1,215       1,161    
Other     -       (365 )  
Income tax effects of adjustments     (2,133 )     (1,066 )  
             
Non-GAAP income     $ 4,353     $ 2,701    
             
Shares used to compute non-GAAP income            
per share          
Basic     17,154       16,783    
Diluted     17,393       17,029    
             
Non-GAAP income per share            
Basic   $ 0.25     $ 0.16    
Diluted   $ 0.25     $ 0.16    
                   

 

 

Contact:Investor RelationsThe Blueshirt GroupLisa LaukkanenNicole GundersonSPSC@blueshirtgroup.com415-217-7722Ali Finer			      	SPS Commerce				866-245-8100				abfiner@spscommerce.com

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