UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): April 25, 2019  

SPS COMMERCE, INC.
(Exact Name of Registrant as Specified in Charter)

Delaware001-3470241-2015127
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

333 South Seventh Street, Suite 1000, Minneapolis, MN 55402
(Address of Principal Executive Offices) (Zip Code)

(612) 435-9400
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On April 25, 2019, we issued a press release disclosing our results of operations and financial condition for our three months ended March 31, 2019. In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in that filing.

Item 9.01. Financial Statements and Exhibits.

          (d)      Exhibits

                     99         Press Release dated April 25, 2019


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 SPS COMMERCE, INC.
   
  
Date: April 25, 2019By: /s/ Kimberly K. Nelson        
  Kimberly K. Nelson
  Executive Vice President and Chief Financial Officer
  


EXHIBIT INDEX

 

No. Description Manner of Filing
99 Press Release dated April 25, 2019 Filed Electronically

EdgarFiling

EXHIBIT 99

SPS Commerce Reports First Quarter 2019 Financial Results

Company delivers 73rd consecutive quarter of topline growth, with 14% growth in recurring revenue over 2018

MINNEAPOLIS, April 25, 2019 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the first quarter ended March 31, 2019.

Revenue was $66.9 million in the first quarter of 2019, compared to $59.1 million in the first quarter of 2018, reflecting 13% growth in revenue from the first quarter of 2018. Recurring revenue grew 14% from the first quarter of 2018. 

Net income in the first quarter of 2019 was $6.8 million or $0.38 per diluted share, compared to net income of $3.3 million or $0.19 per diluted share, in the first quarter of 2018. Non-GAAP income per diluted share was $0.60 compared to non-GAAP income per diluted share of $0.39 in the first quarter of 2018.

Adjusted EBITDA for the first quarter of 2019 increased 51% to $16.4 million compared to the first quarter of 2018.

“SPS Commerce’s differentiated value proposition of leading technology, scale and industry expertise position the company to gain market share as the retail industry continues its digital transformation journey,” said Archie Black, President and CEO of SPS Commerce.  “As retail trends fuel the need for business process automation and increased efficiency, SPS Commerce continues to redefine EDI solutions and full-scale retail change management.”

“We posted strong performance in the first quarter of 2019, continuing to execute to our long-term financial targets while growing our network of customers,” said Kim Nelson, CFO of SPS Commerce.

Guidance

For the second quarter of 2019, revenue is expected to be in the range of $67.7 million to $68.2 million.  Second quarter net income per diluted share is expected to be in the range of $0.33 to $0.35 with fully diluted weighted average shares outstanding of approximately 18.0 million shares.  Non-GAAP income per diluted share is expected to be in the range of $0.51 to $0.53.  Adjusted EBITDA is expected to be in the range of $15.8 million to $16.3 million.  Non-cash, share-based compensation expense is expected to be approximately $3.3 million, depreciation expense is expected to be approximately $2.8 million and amortization expense is expected to be approximately $1.3 million.

For the full year of 2019, revenue is expected to be in the range of $275.0 million to $276.5 million, representing approximately 11% growth over 2018. Full year net income per diluted share is expected to be in the range of $1.39 to $1.45 with fully diluted weighted average shares outstanding of approximately 18.0 million shares.   Non-GAAP income per diluted share is expected to be in the range of $2.16 to $2.22. Adjusted EBITDA is expected to be in the range of $65.0 to $66.5 million, representing approximately 27% to 30% growth over 2018. Non-cash, share-based compensation expense is expected to be approximately $15.5 million, depreciation expense is expected to be approximately $11.3 million and amortization expense is expected to be approximately $5.2 million. 

Quarterly Conference Call

SPS Commerce will discuss its quarterly 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 # 3283868 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 perfects the power of trading partner relationships with the industry's most broadly adopted, retail cloud services platform. As a leader in cloud-based supply chain management solutions, we provide proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. SPS Commerce has achieved 73 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, please contact SPS Commerce at 866-245-8100 or visit www.spscommerce.com.

SPS COMMERCE, SPS, SPS logo, RETAIL UNIVERSE, 1=INFINITY logo, AS THE NETWORK GROWS, SO DOES YOUR OPPORTUNITY, INFINITE RETAIL POWER, RETAIL UNIVERSE are marks of SPS Commerce, Inc. and Registered in the U.S. Patent and Trademark Office. RSX, IN:FLUENCE, and others are further marks of SPS Commerce

Use of Non-GAAP Financial Measures

To supplement its financial statements, SPS Commerce also provides investors with Adjusted EBITDA 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 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. It uses Adjusted EBITDA for purposes of determining executive and senior management incentive compensation. These measures are also presented to the company's board of directors.

Adjusted EBITDA consists of net income adjusted for depreciation and amortization, interest expense, interest income, income tax expense, stock-based compensation expense, and other adjustments as necessary for a fair presentation. SPS Commerce uses Adjusted EBITDA as a measure of operating performance because it assists the company in comparing performance on a consistent basis, as it removes from operating results the impact of the company's capital structure. SPS Commerce believes Adjusted EBITDA is useful to an investor in evaluating the company's operating performance because it is 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 plus stock-based compensation expense, amortization expense related to intangible assets, 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 includes an adjustment to non-GAAP income to reflect the income tax effects of the adjustments to GAAP net income. 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.

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.  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, our positioning for the future and our performance for the second quarter and full year of 2019, 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, 2018, 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 share amounts) 
         
  March 31,  December 31, 
  2019  2018 
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents $143,715  $133,859 
Short-term investments  41,683   44,537 
Accounts receivable, less allowance for doubtful accounts of $1,478 and $1,392, respectively  28,301   27,488 
Deferred costs  34,692   34,502 
Other current assets  8,858   9,229 
Total current assets  257,249   249,615 
PROPERTY AND EQUIPMENT, less accumulated depreciation of $43,702 and $41,175, respectively  20,710   20,957 
OPERATING LEASE RIGHT-OF-USE ASSET  15,234    
GOODWILL  70,075   69,658 
INTANGIBLE ASSETS, net  21,572   22,741 
OTHER ASSETS        
Deferred costs  11,199   10,973 
Deferred income tax asset  9,528   10,456 
Other assets  1,630   1,723 
Total assets $407,197  $386,123 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable $4,391  $4,440 
Accrued compensation  11,974   20,415 
Accrued expenses  4,619   4,558 
Deferred revenue  28,889   25,328 
Deferred rent     1,781 
Operating lease liabilities  3,509    
Total current liabilities  53,382   56,522 
OTHER LIABILITIES        
Deferred revenue  2,649   2,512 
Deferred rent     5,371 
Operating lease liabilities  17,723    
Deferred income tax liability  1,315   1,376 
Other non-current liabilities  1,424   1,368 
Total liabilities  76,493   67,149 
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; 55,000,000 shares authorized; 17,913,306 and 17,757,628 shares issued; and 17,467,682 and 17,345,736 outstanding, respectively  18   18 
Treasury stock, at cost; 445,624 and 411,892 shares, respectively  (28,645)  (25,679)
Additional paid-in capital  339,730   332,592 
Retained earnings  22,074   15,261 
Accumulated other comprehensive loss  (2,473)  (3,218)
Total stockholders’ equity  330,704   318,974 
Total liabilities and stockholders’ equity $407,197  $386,123 
         
Subject to reclassification        


SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(Unaudited; in thousands, except per share amounts) 
         
  Three Months Ended 
  March 31, 
  2019  2018 
Revenues $66,934  $59,092 
Cost of revenues  21,367   19,758 
Gross profit  45,567   39,334 
Operating expenses        
Sales and marketing  17,922   18,647 
Research and development  6,192   5,132 
General and administrative  12,770   10,130 
Amortization of intangible assets  1,304   1,125 
Total operating expenses  38,188   35,034 
Income from operations  7,379   4,300 
Other income (expense)        
Interest income, net  577   414 
Other expense, net  (47)  (154)
Change in earn-out liability  (56)   
Total other income, net  474   260 
Income before income taxes  7,853   4,560 
Income tax expense  1,040   1,306 
Net income $6,813  $3,254 
         
Net income per share        
Basic $0.39  $0.19 
Diluted $0.38  $0.19 
         
Weighted average common shares used to compute net income per share        
Basic  17,471   17,093 
Diluted  17,992   17,307 


SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited; in thousands) 
  Three months ended 
  March 31, 
  2019  2018 
Cash flows from operating activities        
Net income $6,813  $3,254 
Reconciliation of net income to net cash provided by operating activities        
Deferred income taxes  838   1,020 
Change in earn-out liability  56    
Depreciation and amortization of property and equipment  2,637   2,083 
Amortization of intangible assets  1,304   1,125 
Provision for doubtful accounts  655   410 
Stock-based compensation  5,294   3,533 
Other, net  (240)  (32)
Changes in assets and liabilities        
Accounts receivable  (1,328)  (1,520)
Deferred costs  (414)  (1,628)
Other current and non-current assets  (337)  367 
Accounts payable  353   317 
Accrued compensation  (8,843)  (3,939)
Accrued expenses  60   (592)
Deferred revenue  3,698   3,680 
Deferred rent     1,271 
Operating leases  (345)   
Net cash provided by operating activities  10,201   9,349 
Cash flows from investing activities        
Purchases of property and equipment  (2,899)  (3,884)
Purchases of investments  (12,447)  (19,927)
Maturities of investments  15,225   17,500 
Acquisitions of businesses and intangible assets, net of cash acquired     (381)
Net cash used in investing activities  (121)  (6,692)
Cash flows from financing activities        
Repurchases of common stock  (2,966)  (5,871)
Net proceeds from exercise of options to purchase common stock  2,472   715 
Net cash used in financing activities  (494)  (5,156)
Effect of foreign currency exchange rate changes  270   (81)
Net increase (decrease) in cash and cash equivalents  9,856   (2,580)
Cash and cash equivalents at beginning of period  133,859   123,127 
Cash and cash equivalents at end of period $143,715  $120,547 
         
Subject to reclassification        


SPS COMMERCE, INC. 
NON-GAAP RECONCILIATION 
(Unaudited; in thousands) 
         
  Three Months Ended 
  March 31, 
  2019  2018 
Net income $6,813  $3,254 
Depreciation and amortization of property        
and equipment  2,637   2,083 
Amortization of intangible assets  1,304   1,125 
Interest income, net  (577)  (414)
Income tax expense  1,040   1,306 
Stock-based compensation expense  5,294   3,533 
Other  (61)  - 
Adjusted EBITDA $16,450  $10,887 
         
Net income $6,813  $3,254 
Stock-based compensation expense  5,294   3,533 
Amortization of intangible assets  1,304   1,125 
Income tax effects of adjustments  (2,643)  (1,153)
Other  (61)  - 
Non-GAAP income $10,707  $6,759 
         
Shares used to compute non-GAAP income per share        
Basic  17,471   17,093 
Diluted  17,992   17,307 
         
Non-GAAP income per share        
Basic $0.61  $0.40 
Diluted $0.60  $0.39 

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

SPS-F