SPS Commerce, Inc.

SPS Commerce, Inc. (SPSC) Market Cap

SPS Commerce, Inc. has a market capitalization of —.

No quote data available.

CEO: Chadwick Collins

Sector: Technology

Industry: Software - Application

IPO Date: 2010-04-22

Website: https://www.spscommerce.com

SPS Commerce, Inc. (SPSC) - Company Information

Market Cap: -|Sector: Technology

Company Profile

SPS Commerce, Inc. delivers comprehensive, cloud-based solutions for supply chain management across the globe. The company's central offering is its "SPS Commerce" platform, an advanced system that enhances operations for retailers, suppliers, grocers, distributors, and logistics firms. This platform allows these businesses to streamline the management and fulfillment of omnichannel orders, boost sell-through efficiency, and automate the creation of new trading partnerships. Key components include the Fulfillment solution, which automates order processing and can either replace or augment a client's existing staff and electronic communication systems. It simplifies adherence to retailer-specific rules, facilitates seamless digital data exchange with numerous trading partners using various protocols, and provides greater transparency into an order's journey. Additionally, the Analytics solution features data analysis applications that empower clients with deeper insights throughout their supply chains. SPS Commerce also offers complementary products like an assortment tool for accurate order management and rapid fulfillment, and a community product designed to expedite vendor onboarding and ensure trading partner compliance with evolving supply chain demands. The company, initially incorporated in 1987 as St. Paul Software, Inc., adopted its current name, SPS Commerce, Inc., in May 2001. It is headquartered in Minneapolis, Minnesota.

Analyst Sentiment

56%
Buy

From 13 Active Polls

1Y Forecast: $68.13

▲ +0.0% Potential Upside

Consensus Target Metrics

Low Bound

$59

Median

$68

High Bound

$86

Average

$68

Price & Moving Averages

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🎯 Wall Street Analyst Intelligence Report

1-Year structural target targets, chart projections, and sentiment maps.

Average 1Y Target
$68.13
▼ -7.17% Upside
Low Target
$59.00
-20% Risk
Median Target
$67.50
-8% Mid
High Target
$86.00
17% Max

Consensus Trend Projection

Trailing closures vs. 12-month metrics map.

Analyst Vote Distribution

Aggregate institutional coverage sentiment weights.

Sentiment volume allocation data unavailable.

valuation & financial ratiosdetailed financials

Historical valuation matrix unavailable.

📘 Full Research Report

ℹ️

AI-Generated Research: This report is for informational purposes only.

📘 SPS COMMERCE INC (SPSC) — Investment Overview

🧩 Business Model Overview

SPS Commerce operates in the retail supply-chain connectivity layer, helping trading partners exchange orders, inventory, product catalogs, and related business documents electronically. The platform sits between retailers and suppliers, translating and routing data using established retail/industry document standards and the company’s integration services. The “value chain” is therefore both operational and data-centric: it reduces manual document handling, accelerates order-to-cash cycles, and improves fulfillment accuracy by standardizing and streamlining the interchange of commercial information across many counterparties.

Operationally, the service creates an adoption pathway that links each customer’s internal systems to SPS-managed workflows and partner connectivity, which deepens reliance on the platform as trading relationships expand.

💰 Revenue Streams & Monetisation Model

Revenue is primarily driven by a recurring software/services model, supported by usage and transaction volumes tied to trading-partner communication activity. Monetisation typically comes from:

  • Subscription fees for access to the integration/communication platform and related tooling.
  • Ongoing connectivity and service revenue that scales with the number of trading-partner connections and document exchange volume.
  • Professional and onboarding-related services that may be partially non-recurring but embed into long-term operating workflows.

Margin structure is supported by software economics: once integrated, incremental throughput and partner connectivity can be delivered with relatively modest incremental cost. Operating leverage is typically driven by customer retention, higher document throughput per customer relationship, and standardized onboarding tooling that reduces the cost to onboard additional trading partners.

🧠 Competitive Advantages & Market Positioning

SPS Commerce’s moat is best characterized as high switching costs driven by “data gravity” and embedded workflow complexity. Over time, the platform becomes the hub for standardized document exchange, partner onboarding, exception handling, and operational processes. Replacing it would require not only re-integration of systems, but also rebuilding the reliability and partner-readiness that the ecosystem provides.

Key structural advantages include:

  • Switching costs (implementation + operational dependencies): integrations, mappings, workflows, and partner-specific requirements create practical friction to migrate.
  • Workflow & reliability track record: trading-partner communication is operationally critical; service continuity and correctness matter to customers.
  • Network-like participation effects: while SPS does not behave like a pure end-user network, trading-partner connectivity and standardized onboarding increase the utility of the hub for additional relationships.

COMPETITIVE BENCHMARKING

Primary competitors in retail EDI/integration and trading-partner connectivity include TrueCommerce, Cleo, and Descartes Systems Group (with additional enterprise integration vendors participating in adjacent use cases). These firms compete for retailer/supplier connectivity projects and platform replacements.

  • TrueCommerce: competes directly in trading-partner connectivity and integration services. SPS’s differentiation is often reflected in its focus on retail-centric document exchange and the embedded nature of its operational workflows.
  • Cleo: emphasizes EDI/integration for broader enterprise needs. SPS’s positioning is more tightly aligned with retail trading activity and partner-specific connectivity scale.
  • Descartes: spans logistics and supply-chain software broadly. SPS’s emphasis is narrower on retail document interchange, where operational fit and onboarding depth drive stickiness.

🚀 Multi-Year Growth Drivers

SPS Commerce’s multi-year growth outlook is tied to durable digitization trends rather than discretionary spend:

  • Retail supply-chain digitization: continued migration from manual processes to standardized electronic document exchange increases demand for integration and reliability.
  • Expansion of omnichannel trade volumes: more fulfillment nodes, more order events, and more partner complexity raise the need for scalable interchange.
  • Onboarding of additional suppliers and trading relationships: each incremental partner increases platform usage and deepens dependency.
  • Rising importance of data accuracy and exceptions management: tighter service levels in order fulfillment make robust document handling and exception workflows more valuable.

Over a 5–10 year horizon, the TAM is driven by the breadth of retail supplier networks and the ongoing requirement for compliant electronic interchange, with growth supported by both new partner onboarding and increased document throughput per relationship.

⚠ Risk Factors to Monitor

  • Customer concentration and procurement cycles: shifts in retailer/supplier spending priorities can affect onboarding momentum and contract renewals.
  • Technological substitution risk: enterprise integration tools and in-house automation could compress demand for certain components, though the embedded operational switching costs are a mitigating factor.
  • Cybersecurity and data integrity: the platform’s role in operational trading workflows heightens the need for strong security, availability, and correctness controls.
  • Competitive pricing pressure: integration markets can face pricing competition; SPS’s ability to defend pricing depends on measurable reliability and operational fit.
  • Implementation complexity: onboarding trading partners requires careful mapping and standards compliance; operational issues can influence retention and expansion.

📊 Valuation & Market View

The market typically values SPS Commerce as a software-enabled service provider rather than a pure EDI commodity, with valuation outcomes driven by:

  • Quality of recurring revenue: stability, retention, and expansion of partner connectivity.
  • Operating leverage: scale benefits from incremental throughput and improving onboarding efficiency.
  • Free cash flow conversion: investors often place weight on how subscription/service revenue converts into cash after operating and capital needs.
  • Growth durability: linkage to supply-chain digitization rather than cyclical IT budgets.

In practice, the sector tends to trade on metrics aligned to SaaS and recurring revenue models (e.g., EV/Revenue and EV/EBITDA), with multiple expansion supported by strong retention and margin trajectory, and contraction risk arising from slower partner additions or elevated competitive pressure.

🔍 Investment Takeaway

SPS Commerce offers an institutional-quality thesis rooted in switching costs and workflow dependency in retail trading-partner integration. Its platform-based approach embeds into operational processes and creates friction to migrate, supporting durable recurring revenue. Multi-year growth should track supply-chain digitization, continued partner onboarding, and rising document exchange complexity across omnichannel retail networks. Key diligence areas center on retention/expansion durability, cybersecurity and service reliability, and the company’s ability to defend differentiation against direct integration competitors.


⚠ AI-generated — informational only. Validate using filings before investing.

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📊 AI Financial Analysis

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Earnings Data: Q Ending 2026-06-30

"SPSC reported Q2’26 revenue of $197.8M and net income of $6.9M (EPS $0.19). On a YoY basis, revenue rose +2.7% (from $192.7M in Q2’25) while net income declined -65.2% (from $19.7M in Q2’25). QoQ, revenue increased +3.0% (from $192.1M in Q1’26) but net income fell -65.2% (from $19.7M). Profitability deteriorated sharply in Q2’26: gross margin improved to 74.9% (from 64.3% in Q1’26), but operating margin contracted to 4.3% (from 12.8%) and net margin to 3.5% (from 10.3%). The biggest driver appears to be higher operating expenses (+0.5M QoQ) and weaker operating profitability despite stronger gross margin. Cash generation remained strong: operating cash flow was $66.0M and free cash flow $57.4M, with net cash rising to $173.2M and net debt remaining negative (net cash position improved). Shareholder returns appear weak: stock price is $57.62 with a -55.2% 1-year change, indicating negative capital appreciation. No dividends were paid, and buybacks continued (repurchased $51.2M in the quarter), supporting total return but not enough to offset the large share price decline. Analyst consensus targets (~$65.38) suggest upside of modest scale versus the current price."

Revenue Growth

Neutral

QoQ revenue increased +2.9% (192.1M to 197.8M). YoY revenue grew +2.7% (187.4M to 197.8M), indicating steady but modest top-line momentum.

Profitability

Neutral

Despite gross margin expansion (74.9% vs 64.3% QoQ), net margin collapsed to 3.5% from 10.3% QoQ, and net income fell -65% YoY. Operating margin fell to 4.3% from 12.8% QoQ.

Cash Flow Quality

Positive

Operating cash flow was $66.0M and free cash flow $57.4M in Q2’26, supporting earnings despite the profit dip. No dividends were paid; buybacks of $51.2M provided shareholder support.

Leverage & Balance Sheet

Positive

Balance sheet strength remains high with large cash balances (cash & equivalents $173.2M) and net cash (netDebt -$166.9M). Equity increased to $938.5M vs $962.2M QoQ, with low total debt.

Shareholder Returns

Neutral

Capital appreciation is very weak: -55.2% over 1 year. Dividend yield is 0%. Buybacks continued (-$51.2M) but total return is likely negative given the sharp price decline.

Analyst Sentiment & Valuation

Caution

Consensus price target is $65.38 vs $57.62 current (~+13.5% implied). With significant 1-year underperformance, valuation may offer some upside, but the recent earnings deterioration limits conviction.

Disclaimer:This analysis is AI-generated for informational purposes only. Accuracy is not guaranteed and this does not constitute financial advice.

RevenueEarningsP/E RatioSharesDebtMargin %

Fundamentals Overview

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SPSC delivered a strong Q2 2026 print with revenue of $198M (+6% YoY) and adjusted EBITDA of $66.6M, alongside $57.4M quarterly free cash flow and $51.2M share repurchases. The key narrative shift was the June 30 divestiture of the 3P revenue recovery business: management remains confident in revenue recovery long term, but argued the 1P supplier side has better portfolio overlap, ideal-customer alignment, and benefits from network-driven cross-sell. Guidance reflects the transition with ~ $10.5M of 2H 2026 revenue reduction and expected neutrality to adjusted EBITDA. On growth levers, management emphasized MAX (agentic AI) and analytics replatforming, with MAX rollout to fulfillment customers targeted by end of summer and additional AI products later in 2026. Risks discussed were mainly timing/denominator effects (ARPU skew, 1P customer count down >200 sequentially from enablement timing) and monitored tariff/fuel uncertainty rather than evidence of demand collapse.

AI IconGrowth Catalysts

  • 1P supplier ARPU acceleration from ongoing upsell and cross-sell momentum (core business excluding divested 3P revenue recovery)
  • MAX (AI agent) driving rapid ROI by resolving trading partner order/anomaly issues (examples cited: overdue orders time savings, invoice failure, stalled dropship orders, unacknowledged POs)
  • Agentic onboarding to reduce customer onboarding and time-to-transact (first fully agentic onboarding completed; complex ERP onboarding progress)
  • Analytics replatform (enhanced platform) intended to improve time-to-insight and enable future AI-predictive capabilities

Business Development

  • Named customers/brands cited for value: Branch Furniture; Chosen Foods; Owlet; Serta Simmons Bedding; RuffleButts
  • Retail partners mentioned (as examples of MAX comparisons and deductions context): Target, Costco, Williams-Sonoma, Lumens, Office Depot, Walmart, Amazon, and other major retailers

AI IconFinancial Highlights

  • Revenue $198.0M (+6% YoY); recurring revenue +6% YoY
  • Adjusted EBITDA $66.6M (growth attributed to process efficiency and scaling execution)
  • Free cash flow $57.4M in Q2; trailing-12-month FCF $198.7M (+40% YoY)
  • Q2 EPS (guided later; Q2 actual EPS not provided in transcript): guidance for Q3 fully diluted EPS $0.72–$0.76; non-GAAP diluted EPS $1.20–$1.23
  • Divestiture impact: 3P revenue recovery sale reduced guidance revenue by ~$10.5M in 2H 2026; expected to be neutral to adjusted EBITDA in 2H 2026
  • Full-year 2026 adjusted EBITDA margin expected ~34% at midpoint, +~300 bps vs full-year 2025
  • Tax modeling: ~30% effective tax rate on GAAP pre-tax net earnings for the remainder of 2026

AI IconCapital Funding

  • Cash and cash equivalents: $173M at quarter end
  • Deployed nearly 90% of Q2 FCF to repurchase $51.2M of SPS shares

AI IconStrategy & Ops

  • Post-divestiture strategic focus on 1P suppliers with multi-retailer trading relationships and portfolio overlap (fulfillment, revenue recovery, analytics)
  • MAX AI agent: proprietary supply chain rules engine powering proactive anomaly detection and automated actions; chat-to-agent transition expected to drive monetization
  • Agentic onboarding: first AI-powered onboarding completed with pre-sale contacts and account provisioning; goal to shift more onboarding processes to AI
  • Analytics platform replatform on enhanced platform enabling faster time-to-insight and future AI features

AI IconMarket Outlook

  • Q3 2026 guidance: revenue $196.3M–$198.3M; adjusted EBITDA $67.4M–$69.4M
  • Q3 2026 guidance: fully diluted EPS $0.72–$0.76; non-GAAP diluted EPS $1.20–$1.23
  • Full-year 2026 guidance: revenue $788.0M–$793.4M (~5% growth at midpoint vs 2025); adjusted EBITDA $265.0M–$269.1M (margin ~34% at midpoint)
  • Full-year 2026 diluted EPS $2.24–$2.33; non-GAAP diluted EPS $4.84–$4.93
  • Operational timing: MAX launch to all SPS Fulfillment customers expected by end of summer; additional AI products planned later in 2026

AI IconRisks & Headwinds

  • ARPU optics in Q2 skewed higher due to consistent ARPU calculation methodology amid the divestiture customer-count timing (7,300 3P customers removed from ending count)
  • Sequential customer count pressure: down a little over 200 sequentially on 1P customer count attributed to timing effects from retail enablement programs; churning/adding is concentrated in lower-ARPU customers
  • Macro/tariff uncertainty noted as monitored; prior-year supplier contract rightsizing due to tariffs expected to dissipate in 2026
  • Ongoing uncertainty in internal AI cost discipline and expense timing (management intentionally did not flow all AI-related spend through the year evenly)

Q&A: Analyst Interest

  • Divestiture rationale and revenue recovery focus: Management said 3P remained confident but the overlap with the rest of the portfolio and ideal customer profile was weaker. They emphasized 1P suppliers’ multi-retailer overlap, cross-selling potential, and policy/take-rate changes that made 1P “much more attractive.”
  • ARPU calculation impact and Q3 step-down: Management confirmed ARPU is calculated the same way and the skew came from timing—3P customers were in beginning count but removed from ending count after the mid-quarter divestiture. Therefore revenue occurred while the ending customer denominator fell, creating a Q2 optical jump going forward.
  • EBITDA guidance drivers (incremental spending/timing): Management attributed the less-than-full EBITDA beat-through to expense movement across quarters (Q2 into Q3 and Q4) and prudence on internal AI investment. They wanted flexibility/cost-room to fund MAX and internal agents without overcommitting the annual cost structure.

Sentiment: POSITIVE

Note: This summary was synthesized by AI from the SPSC Q2 2026 earnings transcript. Financial data is complex; please verify all metrics against official SEC filings before making investment decisions.

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© 2026 Stock Market Info — SPS Commerce, Inc. (SPSC) Financial Profile