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): July 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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.001 per shareSPSCThe Nasdaq Stock Market LLC
(Nasdaq Global Market)

 

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

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 July 25, 2019, we issued a press release disclosing our results of operations and financial condition for our three and six months ended June 30, 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 8.01. Other Events.

The Company further announced in its July 25, 2019 press release that its board of directors declared a 2-for-1 stock split, to be effected in the form of a share dividend, on the Company’s issued and outstanding common stock. As a result of the stock split, shareholders of record, as of market close on August 8, 2019, will receive one additional share of common stock for every share of common stock held. The share dividend will be payable on August 22, 2019.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 99          Press Release dated July 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: July 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 July 25, 2019 Filed Electronically

EdgarFiling

EXHIBIT 99

SPS Commerce Reports Second Quarter 2019 Financial Results

Company delivers 74th consecutive quarter of topline growth, with 14% growth in recurring revenue over 2018; Announces 2-for-1 Stock Split

MINNEAPOLIS, July 25, 2019 (GLOBE NEWSWIRE) -- SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the second quarter ended June 30, 2019.

Revenue was $68.5 million in the second quarter of 2019, compared to $61.1 million in the second quarter of 2018, reflecting 12% growth in revenue from the second quarter of 2018. Recurring revenue grew 14% from the second quarter of 2018. 

Net income in the second quarter of 2019 was $8.8 million or $0.49 per diluted share, compared to net income of $5.4 million or $0.31 per diluted share, in the second quarter of 2018. Non-GAAP income per diluted share was $0.60 compared to non-GAAP income per diluted share of $0.49 in the second quarter of 2018.

Adjusted EBITDA for the second quarter of 2019 increased 36% to $16.4 million compared to the second quarter of 2018.

“SPS Commerce delivered strong second quarter results driven by continued execution and robust demand for our full-service EDI solutions,” said Archie Black, President and CEO of SPS Commerce.  “With decades of experience working with retailers and suppliers at all stages of their e-commerce journey, we continue to empower our customers to capitalize on e-commerce trends that are revolutionizing the retail landscape.”

“We are pleased with our second quarter performance, and we’d like to congratulate all employees for helping SPS execute on its financial targets and earning recognition from our customers and industry peers for our leading products and solutions,” said Kim Nelson, CFO of SPS Commerce.

Stock Split

In the second quarter of 2019, the SPS Commerce Board of Directors approved a two-for-one split of all outstanding shares of the company’s common stock.

As a result, stockholders will be issued one additional share of SPS stock for each share held on August 8, 2019, known as the record date. The distribution date for the new shares will be August 22, 2019. The stock split will increase the number of shares outstanding from approximately 18.1 million shares to approximately 36.2 million shares.

Guidance

For the third quarter of 2019, revenue is expected to be in the range of $69.7 million to $70.2 million.  Third quarter net income per diluted share is expected to be in the range of $0.37 to $0.39 with fully diluted weighted average shares outstanding of approximately 18.1 million shares, or $0.19 - $0.20 on a split adjusted basis with fully diluted weighted average shares outstanding of approximately 36.2 million shares.  Non-GAAP income per diluted share is expected to be in the range of $0.55 to $0.56, or $0.27 - $0.28 on a split adjusted basis.  Adjusted EBITDA is expected to be in the range of $16.9 million to $17.4 million.  Non-cash, share-based compensation expense is expected to be approximately $3.2 million, depreciation expense is expected to be approximately $2.9 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 $276.6 million to $277.7 million, representing approximately 11% to 12% growth over 2018. Full year net income per diluted share is expected to be in the range of $1.62 to $1.67 with fully diluted weighted average shares outstanding of approximately 18.1 million shares, or $0.81 to $0.84 on a split adjusted basis with fully diluted weighted average shares outstanding of approximately 36.2 million shares.  Non-GAAP income per diluted share is expected to be in the range of $2.30 to $2.35, or $1.15 to $1.18 on a split adjusted basis.  Adjusted EBITDA is expected to be in the range of $67.2 to $68.3 million, representing approximately 31% to 33% growth over 2018. Non-cash, share-based compensation expense is expected to be approximately $14.7 million, depreciation expense is expected to be approximately $11.2 million and amortization expense is expected to be approximately $5.2 million. 

Upcoming Conferences

SPS Commerce management will present at the following upcoming investor conferences:

A webcast of the presentations will be available on the company’s investor relations website at http://investors.spscommerce.com/events. 

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 # 2739989 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 74 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 third 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 per share amounts) 
         
  June 30,  December 31, 
  2019  2018 
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents $147,023  $133,859 
Short-term investments  51,651   44,537 
Accounts receivable, less allowance for doubtful accounts of $1,435 and $1,392, respectively  30,747   27,488 
Deferred costs  35,087   34,502 
Other current assets  8,265   9,229 
Total current assets  272,773   249,615 
PROPERTY AND EQUIPMENT, less accumulated depreciation of $46,412 and $41,175, respectively  20,597   20,957 
OPERATING LEASE RIGHT-OF-USE ASSET  14,038    
GOODWILL  70,300   69,658 
INTANGIBLE ASSETS, net  20,379   22,741 
OTHER ASSETS        
Deferred costs  10,441   10,973 
Deferred income tax asset  7,627   10,456 
Other assets  2,452   1,723 
Total assets $418,607  $386,123 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable $3,708  $4,440 
Accrued compensation  15,883   20,415 
Accrued expenses  4,964   4,558 
Deferred revenue  30,376   25,328 
Deferred rent     1,781 
Operating lease liabilities  3,469    
Total current liabilities  58,400   56,522 
OTHER LIABILITIES        
Deferred revenue  2,714   2,512 
Deferred rent     5,371 
Operating lease liabilities  16,890    
Deferred income tax liability  1,246   1,376 
Other non-current liabilities  1,024   1,368 
Total liabilities  80,274   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; 17,971,845 and 17,757,628
shares issued; and 17,468,106 and 17,345,736 outstanding, respectively
  18   18 
Treasury stock, at cost; 503,739 and 411,892 shares, respectively  (34,645)  (25,679)
Additional paid-in capital  344,250   332,592 
Retained earnings  30,870   15,261 
Accumulated other comprehensive loss  (2,160)  (3,218)
Total stockholders’ equity  338,333   318,974 
Total liabilities and stockholders’ equity $418,607  $386,123 
         
Subject to reclassification        


         
SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(Unaudited; in thousands, except per share amounts) 
                 
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2019  2018  2019  2018 
Revenues $68,529  $61,091  $135,463  $120,183 
Cost of revenues  23,700   20,402   45,067   40,160 
Gross profit  44,829   40,689   90,396   80,023 
Operating expenses                
Sales and marketing  17,545   18,424   35,467   37,071 
Research and development  6,509   5,293   12,701   10,425 
General and administrative  10,179   9,974   22,949   20,104 
Amortization of intangible assets  1,266   1,033   2,570   2,158 
Total operating expenses  35,499   34,724   73,687   69,758 
Income from operations  9,330   5,965   16,709   10,265 
Other income (expense)                
Interest income, net  813   547   1,390   961 
Other income (expense), net  240   (168)  193   (322)
Change in earn-out liability  400      344    
Total other income, net  1,453   379   1,927   639 
Income before income taxes  10,783   6,344   18,636   10,904 
Income tax expense  1,987   928   3,027   2,234 
Net income $8,796  $5,416  $15,609  $8,670 
                 
Net income per share                
Basic $0.50  $0.32  $0.89  $0.51 
Diluted $0.49  $0.31  $0.87  $0.50 
                 
Weighted average common shares used to compute net income per share                
Basic  17,505   17,163   17,488   17,140 
Diluted  18,010   17,549   18,003   17,446 


SPS COMMERCE, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited; in thousands) 
  Six Months Ended 
  June 30, 
  2019  2018 
Cash flows from operating activities        
Net income $15,609  $8,670 
Reconciliation of net income to net cash provided by operating activities        
Deferred income taxes  2,634   1,498 
Change in earn-out liability  (344)   
Depreciation and amortization of property and equipment  5,324   4,176 
Amortization of intangible assets  2,570   2,158 
Provision for doubtful accounts  1,504   985 
Stock-based compensation  8,169   6,712 
Other, net  (357)  (211)
Changes in assets and liabilities        
     Accounts receivable  (4,769)  (4,373)
     Deferred costs  (56)  (2,621)
     Other current and non-current assets  (549)  (710)
     Accounts payable  (490)  189 
     Accrued compensation  (5,210)  (1,464)
     Accrued expenses  404   62 
     Deferred revenue  5,250   6,237 
     Deferred rent     939 
     Operating leases  (27)   
         Net cash provided by operating activities  29,662   22,247 
Cash flows from investing activities        
Purchases of property and equipment  (5,351)  (6,481)
Purchases of investments  (44,548)  (52,116)
Maturities of investments  37,725   45,000 
Acquisitions of businesses and intangible assets, net of cash acquired     (381)
Net cash used in investing activities  (12,174)  (13,978)
Cash flows from financing activities        
Repurchases of common stock  (8,966)  (11,869)
Net proceeds from exercise of options to purchase common stock  3,371   5,120 
Net proceeds from employee stock purchase plan  1,079   836 
Net cash used in financing activities  (4,516)  (5,913)
Effect of foreign currency exchange rate changes  192   (98)
Net increase in cash and cash equivalents  13,164   2,258 
Cash and cash equivalents at beginning of period  133,859   123,127 
Cash and cash equivalents at end of period $147,023  $125,385 
         
Subject to reclassification        


SPS COMMERCE, INC. 
NON-GAAP RECONCILIATION 
(Unaudited; in thousands, except per share amounts) 
                 
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2019  2018  2019  2018 
Net income $8,796  $5,416  $15,609  $8,670 
Depreciation and amortization of property                
and equipment  2,688   2,093   5,324   4,176 
Amortization of intangible assets  1,266   1,033   2,570   2,158 
Interest income, net  (813)  (547)  (1,390)  (961)
Income tax expense  1,987   928   3,027   2,234 
Stock-based compensation expense  2,875   3,179   8,169   6,712 
Other  (400)  -   (461)  - 
Adjusted EBITDA $16,399  $12,102  $32,848  $22,989 
                 
Net income $8,796  $5,416  $15,609  $8,670 
Stock-based compensation expense  2,875   3,179   8,169   6,712 
Amortization of intangible assets  1,266   1,033   2,570   2,158 
Income tax effects of adjustments  (1,723)  (1,027)  (4,366)  (2,180)
Other  (400)  -   (461)  - 
Non-GAAP income $10,814  $8,601  $21,521  $15,360 
                 
Shares used to compute non-GAAP income per share                
Basic  17,505   17,163   17,488   17,140 
Diluted  18,010   17,549   18,003   17,446 
                 
Non-GAAP income per share                
Basic $0.62  $0.50  $1.23  $0.90 
Diluted $0.60  $0.49  $1.20  $0.88 

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

SPS-F