SPS Commerce Reports Fourth Quarter and Full Year 2021 Financial Results

Company delivers 84th consecutive quarter of topline growth, with 23% growth in revenue and 21% growth in recurring revenue over fourth quarter 2020


MINNEAPOLIS, Feb. 09, 2022 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the fourth quarter and full year ended December 31, 2021.

Revenue was $102.8 million in the fourth quarter of 2021, compared to $83.3 million in the fourth quarter of 2020, reflecting 23% growth in revenue from the fourth quarter of 2020. Recurring revenue grew 21% from the fourth quarter of 2020.

Net income in the fourth quarter of 2021 was $12.8 million or $0.34 per diluted share, compared to net income of $13.5 million or $0.37 per diluted share, in the fourth quarter of 2020. Non-GAAP net income per diluted share was $0.46, compared to non-GAAP net income per diluted share of $0.40 in the fourth quarter of 2020. Adjusted EBITDA for the fourth quarter of 2021 increased 21% to $27.7 million compared to the fourth quarter of 2020.

“Our competitive differentiation and ability to expedite trading partner onboarding is rooted in the size of the SPS Commerce network, our world class products and people, and the strategic acquisitions we made over the years to facilitate integration of the SPS solution to our customers’ ERP systems,” said Archie Black, CEO of SPS Commerce. “Our investments are accelerating our growth, while expanding our addressable market.”  

Revenue for the full year ended December 31, 2021 was $385.3 million compared to $312.6 million for the full year ended December 31, 2020, reflecting 23% growth. Recurring revenue grew 20% from the year ended December 31, 2020.

Net income for the year ended December 31, 2021 was $44.6 million or $1.21 per diluted share, compared to net income of $45.6 million or $1.26 per diluted share, for the comparable period in 2020. Non-GAAP net income per diluted share for the year ended December 31, 2021 was $1.82, compared to non-GAAP net income per diluted share of $1.53 for the comparable period in 2020. Adjusted EBITDA for the full year ended December 31, 2021 increased 23% to $107.0 million, compared to the full year ended December 31, 2020.

“SPS Commerce delivered another year of strong execution and profitable growth,” said Kim Nelson, CFO of SPS Commerce. “Fulfillment automation and the need for supply chain efficiencies continue to drive demand for EDI, and SPS is well positioned to capitalize on evolving retail dynamics with our growing portfolio of solutions.”

Guidance

First quarter 2022 revenue is expected to be in the range of $103.8 million to $104.8 million. Full year 2022 revenue is expected to be in the range of $442.5 million to $445.5 million, representing approximately 15% to 16% growth over 2021.

First quarter 2022 net income per diluted share is expected to be in the range of $0.24 to $0.25 with fully diluted weighted average shares outstanding of approximately 37.3 million shares. Full year 2022 net income per diluted share is expected to be in the range of $1.15 to $1.18 with fully diluted weighted average shares outstanding of approximately 37.5 million shares.

First quarter 2022 non-GAAP net income per diluted share is expected to be in the range of $0.46 to $0.47. Full year 2022 non-GAAP net income per diluted share is expected to be in the range of $1.99 to $2.02.

First quarter 2022 Adjusted EBITDA is expected to be in the range of $28.8 to $29.3 million. Full year 2022 Adjusted EBITDA is expected to be in the range of $125.0 million to $126.5 million, representing approximately 17% to 18% growth over 2021.

First quarter 2022 non-cash, share-based compensation expense is expected to be approximately $9.2 million. Depreciation expense is expected to be approximately $4.0 million and amortization expense is expected to be approximately $2.5 million.

Full year 2022 non-cash, share-based compensation expense is expected to be approximately $35.0 million. Depreciation expense is expected to be approximately $18.1 million and amortization expense is expected to be approximately $10.0 million.

For 2022, we expect an annual effective tax rate of approximately 30%.

Quarterly Conference Call

SPS Commerce will discuss its quarterly and annual 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 #3897068 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 http://investors.spscommerce.com under the Events and Presentations menu. The replay will also be available on our website at http://investors.spscommerce.com.

About SPS Commerce

SPS Commerce is the world’s leading retail network, connecting trading partners around the globe to optimize supply chain operations for all retail partners. We support data-driven partnerships with innovative cloud technology, customer-obsessed service and accessible experts so our customers can focus on what they do best. To date, more than 105,000 companies in retail, distribution, grocery and e-commerce have chosen SPS as their retail network. SPS has achieved 84 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, contact SPS at 866-245-8100 or visit www.spscommerce.com.

SPS COMMERCE, SPS, SPS logo, 1=INFINITY logo, AS THE NETWORK GROWS, SO DOES YOUR OPPORTUNITY, INFINITE RETAIL POWER, MASTERING THE RETAIL GAME and RSX are marks of SPS Commerce, Inc. and Registered in the U.S. Patent and Trademark Office. 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, Adjusted EBITDA Margin, and non-GAAP net income per share, which are non-GAAP financial measures. SPS Commerce believes that these non-GAAP measures provide useful information to management, our board of directors, 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. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation.

Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain or loss from foreign currency on cash and investments held, investment income or loss, and other adjustments as necessary for a fair presentation.

Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.

SPS Commerce uses Adjusted EBITDA and Adjusted EBITDA Margin as measures of operating performance because they assist the Company in comparing performance on a consistent basis, as they remove from operating results the impact of the Company's capital structure. SPS Commerce believes Adjusted EBITDA and Adjusted EBITDA Margin are useful to an investor in evaluating the Company's operating performance because they are 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 adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain or loss from foreign currency on cash and investments held, and other adjustments as necessary for a fair presentation, 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.

SPS Commerce 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, SPS Commerce recalculates income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments (e.g., stock-based compensation expense). 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.

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 2022, 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, 2020, 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 shares) 
         
  December 31, 
  2021  2020 
ASSETS        
Current assets        
Cash and cash equivalents $207,552  $149,692 
Short-term investments  49,758   37,786 
Accounts receivable  38,811   37,811 
Allowance for credit losses  (4,249)  (4,233)
Accounts receivable, net  34,562   33,578 
Deferred costs  44,529   37,988 
Other assets  16,042   12,312 
Total current assets  352,443   271,356 
Property and equipment, net  31,901   26,432 
Operating lease right-of-use assets  10,851   15,581 
Goodwill  143,663   134,853 
Intangible assets, net  58,587   60,230 
Investments, non-current     2,500 
Other assets        
Deferred costs, non-current  15,191   12,607 
Deferred income tax assets  182   194 
Other assets, non-current  3,028   2,705 
Total assets $615,846  $526,458 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities        
Accounts payable $8,330  $5,354 
Accrued compensation  31,661   22,872 
Accrued expenses  8,345   11,161 
Deferred revenue  50,428   37,947 
Operating lease liabilities  4,108   2,798 
Total current liabilities  102,872   80,132 
Other liabilities        
Deferred revenue, non-current  5,144   2,996 
Operating lease liabilities, non-current  16,426   19,672 
Deferred income tax liabilities  7,145   2,937 
Total liabilities  131,587   105,737 
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; 110,000,000 shares authorized; 37,798,610 and 37,100,467 shares issued; and 36,009,257 and 35,487,217 shares outstanding, respectively  38   37 
Treasury Stock, at cost; 1,789,353 and 1,613,250 shares, respectively  (85,677)  (65,247)
Additional paid-in capital  433,258   393,462 
Retained earnings  138,087   93,490 
Accumulated other comprehensive loss  (1,447)  (1,021)
Total stockholders’ equity  484,259   420,721 
Total liabilities and stockholders’ equity $615,846  $526,458 
         
Results presented are unaudited and thus, are subject to adjustment. Audited results will be included within the 10-K filing. 


  
SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(Unaudited; in thousands, except per share amounts) 
                 
  Three Months Ended  Year Ended 
  December 31,  December 31, 
  2021  2020  2021  2020 
Revenues $102,756  $83,308  $385,276  $312,630 
Cost of revenues  35,635   26,921   131,678   99,836 
Gross profit  67,121   56,387   253,598   212,794 
Operating expenses                
Sales and marketing  22,658   19,812   88,044   75,955 
Research and development  10,579   7,937   39,038   31,024 
General and administrative  16,119   13,528   61,305   50,119 
Amortization of intangible assets  2,392   1,553   10,126   5,538 
Total operating expenses  51,748   42,830   198,513   162,636 
Income from operations  15,373   13,557   55,085   50,158 
Other income (expense), net  (120) 1,304   (1,544)  2,522 
Income before income taxes  15,253   14,861   53,541   52,680 
Income tax expense  2,488   1,391   8,944   7,094 
Net income $12,765  $13,470  $44,597  $45,586 
                 
Net income per share                
Basic $0.35  $0.38  $1.24  $1.29 
Diluted $0.34  $0.37  $1.21  $1.26 
                 
Weighted average common shares used to compute net income per share                
Basic  36,091   35,504   35,928   35,226 
Diluted  37,135   36,624   36,962   36,285 
                 
  
  

Results presented are unaudited and thus, are subject to adjustment. Audited results will be included within the 10-K filing.

  
SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited; in thousands) 
  Year Ended 
  December 31, 
  2021  2020 
Cash flows from operating activities        
Net income $44,597  $45,586 
Reconciliation of net income to net cash provided by operating activities        
Deferred income taxes  3,881   4,241 
Change in earn-out liability     (85)
Depreciation and amortization of property and equipment  14,788   13,127 
Amortization of intangible assets  10,126   5,538 
Provision for credit losses  4,717   5,660 
Stock-based compensation  27,574   18,936 
Other, net  323   (24)
Changes in assets and liabilities, net of effects of acquisition        
     Accounts receivable  (4,959)  (5,922)
     Deferred costs  (9,299)  (3,414)
     Other current and non-current assets  (6,181)  1,201 
     Accounts payable  2,259   1,214 
     Accrued compensation  6,775   (1,257)
     Accrued expenses  1,017   563 
     Deferred revenue  14,483   4,432 
     Operating leases  2,792   (1,234)
          Net cash provided by operating activities  112,893   88,562 
Cash flows from investing activities        
Purchases of property and equipment  (19,588)  (16,467)
Purchases of investments  (114,014)  (74,797)
Maturities of investments  103,965   69,461 
Acquisition of business and intangible assets, net  (17,066)  (98,666)
Net cash used in investing activities  (46,703)  (120,469)
Cash flows from financing activities        
Repurchases of common stock  (20,430)  (18,950)
Net proceeds from exercise of options to purchase common stock  9,374   18,592 
Net proceeds from employee stock purchase plan activity  4,737   3,374 
Payment for contingent consideration  (2,042)  (688)
Net cash provided by (used in) financing activities  (8,361)  2,328 
Effect of foreign currency exchange rate changes  31   19 
Net increase (decrease) in cash and cash equivalents  57,860   (29,560)
Cash and cash equivalents at beginning of year  149,692   179,252 
Cash and cash equivalents at end of year $207,552  $149,692 
         
         

Results presented are unaudited and thus, are subject to adjustment. Audited results will be included within the 10-K filing.

  
SPS COMMERCE, INC. 
NON-GAAP RECONCILIATION 
(Unaudited; in thousands, except share and per share amounts) 
         
  Year Ended 
  December 31, 
  2021  2020 
         
Adjusted EBITDA 
Net income $44,597  $45,586 
Income tax expense  8,944   7,094 
Depreciation and amortization of property and equipment  14,788   13,127 
Amortization of intangible assets  10,126   5,538 
Stock-based compensation expense  27,574   18,936 
Realized (gain) loss from foreign currency on cash and investments held  1,456   (1,753)
Investment income  (278)  (1,208)
Other  (192)  (326)
Adjusted EBITDA $107,015  $86,994 
         
Adjusted EBITDA Margin 
Revenue $385,276  $312,630 
Net income  44,597   45,586 
Net Income Margin  12%  15%
         
Adjusted EBITDA $107,015  $86,994 
Adjusted EBITDA Margin  28%  28%
         
Non-GAAP Income 
Net income $44,597  $45,586 
Stock-based compensation expense  27,574   18,936 
Amortization of intangible assets  10,126   5,538 
Realized (gain) loss from foreign currency on cash and investments held  1,456   (1,753)
Other  (192)  (326)
Income tax effects of adjustments  (16,454)  (12,285)
Non-GAAP income $67,107  $55,696 
         
Shares used to compute non-GAAP income per share        
Basic  35,928   35,226 
Diluted  36,962   36,285 
         
Non-GAAP income per share        
Basic  1.87   1.58 
Diluted  1.82   1.53 
         

Contact:
Investor Relations
The Blueshirt Group
Irmina Blaszczyk
Lisa Laukkanen
SPSC@blueshirtgroup.com
415-217-4962