SPS COMMERCE INC Q1 FY2025 earnings call

• SPS Commerce delivered strong first quarter results with revenue growth of 21% to $181.5 million and recurring revenue growth of 23%. • Acquired CarbonSix in February, expanding the portfolio and establishing leadership in revenue recovery. • Highlighted customer success stories like Fastenal and Barilla, showcasing how SPS Commerce helped improve supply chain efficiency. • Participated in industry groups like the Food Industry Association Supply Chain Forum to promote supply chain performance tools. • Actively engages with supply chain professionals to drive adoption of advanced technologies.

First quarter revenue grew 21% to $181.5 million. Recurring revenue grew 23%. The acquisition of CarbonSix added approximately 8,500 customers, with net 300 organic customer adds. Recurring revenue contributes significantly to the overall revenue, with a 23% year-over-year growth. The analytics segment is approximately 10% of the total business and saw a slight year-over-year decline of about 2%.

• Second quarter 2025 revenue expected to be in the range of $184.5 million to $186.2 million, representing 20%-21% year-over-year growth. Adjusted EBITDA expected to be $53 million to $54.5 million. • Full-year 2025 revenue expected to be in the range of $758.5 million to $763 million, representing 19%-20% growth. Adjusted EBITDA expected to be $229.4 million to $232.9 million, representing 23%-25% growth. • Fully diluted earnings per share expected to be $2.06 to $2.13 for the full year, with non-GAAP diluted income per share in the range of $3.86 to $3.93.

• Macro-economic uncertainties and trade dynamics could impact the retail industry. • Tariffs and related uncertainties may affect supply chain reorientation and supplier base diversification. • Analytics segment is somewhat impacted by economic uncertainty, as it tends to be more discretionary. • Potential impact of de minimis exemption expiry on the customer base, though majority of Amazon sellers are not expected to be majorly impacted.

Q: Please go ahead. Parker Lane from Stifel asked about cross-sell potential between revenue recovery and fulfillment solutions.

A: Chad Collins responded that the ideal customer profiles for revenue recovery and fulfillment line up nicely, with early indications of positive cross-selling opportunities through incentives and lead-sharing programs.

Q: Parker Lane followed up on analytics segment decline.

A: Kim Nelson stated analytics declined by ~2% year over year, impacted by economic uncertainty, and expects slight improvement in the remainder of the year to be flat on an annual basis.

Q: Rob Morelli from Needham and Co asked about EPS outperformance and full-year guide.

A: Kim Nelson explained it's driven by timing of expenses and investments.

Q: Lachlan Brown from Redburn Atlantic asked about new customer organic/inorganic split.

A: Chad Collins said net 300 organic adds, driven by mix of opportunities for new subscribing customers in community programs.

Q: George Kurosawa from Citi asked about positive offsets to tariff risks.

A: Chad Collins mentioned potential for retailers to digitally upscale chains, leading to more document exchanges and enablement campaigns.

Q: Dylan Becker from William Blair asked about resource allocation in enablement campaigns.

A: Chad Collins said it's driven by how much SPS has worked with given retailers.

Q: Joe Vruwink from Baird asked about CarbonSix customer discovery.

A: Kim Nelson explained more rigorous exercise after acquiring CarbonSix revealed more customers than initial estimate.

Q: Jeff Van Rhee from Craig Hallum asked about supplier count surprise in CarbonSix.

A: Kim Nelson detailed more complete view of customers after acquisition led to higher count.

Q: Mark Schappel from Loop Capital Markets asked about leading indicators and ERP/WMS projects.

A: Chad Collins said monitoring community enablement campaign pipeline and supplier retention, with no current slowdown in ERP/WMS projects but close monitoring.