SPS COMMERCE INC Q4 FY2024 earnings call

• SPS Commerce executed its mission to optimize trading partner relationships in the retail industry, delivering strong performance in Q4 2024 and full year 2024.
• Acquisitions in 2024 included Vision33's SAP Business One integration technology, Traverse Systems, SupplyPike, and in February 2025, the closing of Carbon6 acquisition to extend network reach and leadership in revenue recovery solutions.
• Partnerships with retailers like Canadian Tire, GNC, and BISSELL were highlighted, showcasing how SPS's solutions helped optimize supply chains, improve collaboration, and drive revenue recovery.
• An updated addressable market analysis was discussed, estimating the global addressable market at $11.1 billion, with $6.5 billion in the U.S., considering small, medium, and large customer segments.

For the full year 2024, revenue grew 19% to $637.8 million. Recurring revenue grew 20% with fulfillment growth of 20% and analytics growth of 8%. In the fourth quarter of 2024, revenue was $170.9 million, an 18% increase over Q4 of the previous year. Recurring revenue grew 19% year-over-year. Adjusted EBITDA for the full year 2024 was $186.6 million, growing 18%, and for Q4 2024, adjusted EBITDA was $49.6 million, an 18% increase.

• First quarter 2025: Revenue expected $178.5M - $180M (19-20% y-o-y growth), adjusted EBITDA $49.5M - $50.5M, fully diluted EPS $0.39 - $0.41.
• Full year 2025: Revenue expected $758M - $763M (19-20% growth over 2024), adjusted EBITDA $227.5M - $231M (22-24% growth over 2024), fully diluted EPS $1.93 - $1.99.

• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially.
• Retail macro environment uncertainties could impact business, though SPS is somewhat isolated from macro headwinds affecting larger supply chain applications due to its mission-critical nature and relatively small ticket price.
• Potential disruptions in supply chain due to external factors like tariff announcements or UPS delivery cuts, though SPS doesn't expect significant impact from such events.

Q: William Jellison asked about impact of adding European geographies on TAM sizing and EBITDA margin guide with Carbon6 acquisition.

A: Chad Collins said outside U.S. portion of TAM was consistent with prior methodologies. Kim Nelson noted gross margin expected to continue improving, a driver of EBITDA growth.

Q: Jeff Van Rhee inquired about new TAM potential customers in new retail subsegments and Carbon6 revenue/EBITDA expectations.

A: Chad Collins said applicable industries are represented in customer base, with varying penetration. Kim Nelson stated Carbon6 acquisition revenue and EBITDA expectations announced at intent to acquire remain, with no update, and seasonality not specific for Carbon6.

Q: Quinton Gabrielli asked about international expansion enablement campaign mix and gross margin resilience.

A: Chad Collins outlined international enablement approach with U.S. retailers, community programs in Europe, and channel. Kim Nelson said gross margin expected to continue improving, seen in latter half of 2024 and expected in 2025.

Q: Nehal Chokshi asked about Amazon-only supplier community size and TAM breakup detail.

A: Kim Nelson and Chad Collins discussed that first-party revenue recovery is included in TAM, with Carbon6 acquisition including one-party side, and third-party Amazon sellers not fully in scope yet but noted as potential incremental TAM.