SPS Commerce, Inc. Q2 FY2025 earnings call

• SPS delivered strong second quarter results with revenue up 22% to $187.4 million and recurring revenue up 24%. • Examples of customers using SPS solutions: Trader Joe's accelerated EDI compliance, Gemplers improved EDI compliance and order automation, Allstar Innovations started using revenue recovery solution. • Acquisition integration of SupplyPike and Carbon6 is delivering value, with the unified platform showing advantages. • The company's full-service approach supports trading partners through uncertain times and aims to increase traction and penetration.

Second quarter revenue grew 22% to $187.4 million, with recurring revenue growing 24%. The company's product portfolio addresses pain points of retailers and suppliers, with examples like Trader Joe's, Gemplers, and Allstar Innovations leveraging their solutions. The acquisition of SupplyPike and Carbon6 is beginning to deliver value, with the unified platform amplifying data across the network.

• Third quarter 2025: Revenue expected to be in range of $191.7M to $193.2M, adjusted EBITDA $57.9M to $59.9M. • Full year 2025: Revenue expected $759M to $763M (19%-20% growth), adjusted EBITDA $230.7M to $233.7M (24%-25% growth). • Beyond 2025: Excluding future acquisitions, expect revenue growth rate at least high single digits. Expect to remain acquisitive, expand adjusted EBITDA margin by 2 percentage points annually.

• Macro environment uncertainties including tariffs and their impact on consumer demand. • Dynamics impacting some customers like heightened spend scrutiny and delayed purchasing decisions, especially affecting mid-market ERP purchase decisions. • Uncertainties in global trade headwinds affecting growth outlook.

Q: How to think about growth by product area to reach high single digits?

A: Core fulfillment driven by community enablement, analytics has more impact depending on economy, revenue recovery has cross-sell opportunities.

Q: Difference in behavior between upmarket, mid-market customers?

A: More pressure in mid-market ERP area with prolonged decision-making on new ERPs, healthy demand on enterprise side but majority of business in mid-market.

Q: Headcount addition plans for margin expansion?

A: Will add headcount as needed to support customers and opportunities, but more efficiently than historical years.

Q: Churn and health of SMB customers?

A: Customer churn consistent, no increased full cancels, pressure on existing customers with slower deal cycles on new customers.