e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended: March 31, 2011
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
Commission file number 001-34702
SPS COMMERCE, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware
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41-2015127 |
(State or Other Jurisdiction of
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(I.R.S. Employer |
Incorporation or Organization)
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Identification No.) |
333 South Seventh Street, Suite 1000, Minneapolis, MN 55402
(Address of Principal Executive Offices, Including Zip Code)
(612) 435-9400
(Registrants Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
The number of shares of the registrants common stock, par value $0.001 per share, outstanding at
April 29, 2011 was 11,897,171 shares.
SPS COMMERCE, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains forward-looking statements regarding us, our
business prospects and our results of operations that are subject to certain risks and
uncertainties posed by many factors and events that could cause our actual business, prospects and
results of operations to differ materially from those that may be anticipated by such
forward-looking statements. Factors that could cause or contribute to such differences include,
but are not limited to, those described under the heading Risk Factors included in our Annual
Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. We undertake no obligation to revise any
forward-looking statements in order to reflect events or circumstances that may subsequently arise.
Readers are urged to carefully review and consider the various disclosures made by us in this
report and in our other reports filed with the Commission that advise interested parties of the
risks and factors that may affect our business.
2
PART I. FINANCIAL INFORMATION
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Item 1. |
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Financial Statements |
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share amounts
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March 31, |
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December 31, |
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2011 |
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2010 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
40,447 |
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$ |
40,473 |
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Accounts receivable, less allowance for doubtful
accounts of $200 and $209 |
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6,356 |
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5,574 |
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Deferred costs, current |
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4,887 |
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4,720 |
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Prepaid expenses and other current assets |
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1,234 |
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874 |
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Total current assets |
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52,924 |
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51,641 |
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PROPERTY AND EQUIPMENT, net |
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2,826 |
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2,760 |
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GOODWILL |
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1,166 |
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1,166 |
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INTANGIBLE ASSETS, net |
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290 |
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290 |
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OTHER ASSETS |
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Deferred costs, net of
current portion |
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2,031 |
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1,943 |
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Other non-current
assets |
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80 |
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80 |
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$ |
59,317 |
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$ |
57,880 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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CURRENT LIABILITIES |
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Capital lease
obligations, current |
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$ |
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$ |
122 |
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Accounts payable |
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1,579 |
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998 |
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Accrued compensation
and benefits |
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3,362 |
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3,577 |
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Accrued expenses and other current liabilities |
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944 |
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807 |
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Deferred revenue,
current |
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3,549 |
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3,585 |
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Total current
liabilities |
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9,434 |
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9,089 |
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OTHER LIABILITIES |
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Deferred revenue, less
current portion |
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5,302 |
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5,002 |
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Other non-current
liabilities |
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244 |
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281 |
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Total liabilities |
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14,980 |
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14,372 |
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STOCKHOLDERS EQUITY |
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Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares
issued and outstanding |
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Common stock, $0.001 par value; 55,000,000 shares authorized; 11,881,688
and 11,849,572 shares issued and outstanding, respectively |
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12 |
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12 |
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Additional paid-in capital |
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106,601 |
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106,264 |
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Accumulated deficit |
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(62,276 |
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(62,768 |
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Total stockholders equity |
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44,337 |
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43,508 |
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$ |
59,317 |
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$ |
57,880 |
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The accompanying notes are an integral part of these consolidated financial statements.
3
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
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Three Months Ended |
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March 31, |
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2011 |
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2010 |
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Revenues |
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$ |
12,649 |
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$ |
10,243 |
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Cost of revenues |
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3,321 |
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2,981 |
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Gross profit |
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9,328 |
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7,262 |
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Operating expenses |
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Sales and marketing |
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5,126 |
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3,507 |
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Research and development |
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1,240 |
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1,043 |
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General and administrative |
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2,455 |
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1,665 |
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Total operating expenses |
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8,821 |
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6,215 |
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Income from operations |
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507 |
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1,047 |
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Other income (expense) |
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Interest expense |
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(45 |
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Interest income |
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32 |
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Other expense |
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(18 |
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(18 |
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Total other income (expense), net |
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14 |
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(63 |
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Income before income taxes |
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521 |
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984 |
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Income tax expense |
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(29 |
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(65 |
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Net income |
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$ |
492 |
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$ |
919 |
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Net income per share |
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Basic |
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$ |
0.04 |
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$ |
2.81 |
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Diluted |
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$ |
0.04 |
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$ |
0.10 |
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Weighted average common shares used to compute net income per share |
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Basic |
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11,864 |
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327 |
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Diluted |
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12,698 |
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9,525 |
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The accompanying notes are an integral part of these consolidated financial statements.
4
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
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Three Months Ended |
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March 31, |
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2011 |
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2010 |
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Cash flows from operating activities |
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Net income |
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$ |
492 |
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$ |
919 |
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Reconciliation of net income to net cash provided by operating activities |
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Depreciation and amortization |
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422 |
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340 |
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Provision for doubtful accounts |
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55 |
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102 |
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Stock-based compensation |
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312 |
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51 |
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Change in carrying value of preferred stock warrants |
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27 |
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Other |
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2 |
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Changes in assets and liabilities |
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Accounts receivable |
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(837 |
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(460 |
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Prepaid expenses and other current assets |
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(360 |
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(573 |
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Deferred costs |
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(255 |
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(235 |
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Accounts payable |
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581 |
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(137 |
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Deferred revenue |
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264 |
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319 |
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Accrued compensation and benefits |
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(215 |
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(338 |
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Accrued expenses and other current liabilities |
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101 |
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237 |
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Net cash provided by operating activities |
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560 |
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254 |
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Cash flows from investing activities |
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Purchases of property and equipment |
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(488 |
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(130 |
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Net cash used in investing activities |
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(488 |
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(130 |
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Cash flows from financing activities |
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Borrowings on line of credit |
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4,450 |
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Payments on line of credit |
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(4,350 |
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Payments on equipment loans |
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(138 |
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Payments of capital lease obligations |
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(122 |
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(21 |
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Net proceeds from exercise of options to purchase common stock |
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24 |
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Net cash used in financing activities |
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(98 |
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(59 |
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Net increase (decrease) in cash and cash equivalents |
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(26 |
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65 |
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Cash and cash equivalents at beginning of period |
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40,473 |
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5,931 |
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Cash and cash equivalents at end of period |
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$ |
40,447 |
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$ |
5,996 |
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The accompanying notes are an integral part of these consolidated financial statements.
5
SPS COMMERCE, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE A General
Business Description
We are a leading provider of on-demand supply chain management solutions, providing
integration, collaboration, connectivity, visibility and data analytics to thousands of customers
worldwide. We provide our solutions through SPSCommerce.net, a hosted software suite that improves
the way suppliers, retailers, distributors and other customers manage and fulfill orders. We
deliver our solutions to our customers over the Internet using a Software-as-a-Service model and
derive the majority of our revenues from thousands of monthly recurring subscriptions from
businesses that utilize our solutions.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America (GAAP)
for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all
of the information and footnotes required by GAAP. We have included all normal recurring
adjustments considered necessary to give a fair statement of our financial position, results of
operations and cash flows for the interim periods shown. Operating results for these interim
periods are not necessarily indicative of the results to be expected for the full year. The
December 31, 2010 balance sheet data was derived from our audited financial statements at that
date. For further information, refer to the consolidated financial statements and accompanying
notes for the year ended December 31, 2010 included in our Annual Report on Form 10-K as filed with
the Securities and Exchange Commission on March 3, 2011.
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could differ from those
estimates.
Significant Accounting Policies
During the three months ended March 31, 2011, there were no material changes in our
significant accounting policies. See Note A to our consolidated financial statements included in
our Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities
and Exchange Commission on March 3, 2011 for additional information regarding our significant
accounting policies.
Recent Accounting Pronouncements
In October 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) No. 2009-13, Revenue Recognition (ASC Topic 605), Multiple-Deliverable Revenue
Arrangements, a consensus of the FASB Emerging Issues Task Force. This guidance modifies the fair
value requirements of ASC subtopic 605-25, Revenue Recognition-Multiple Element Arrangements, by
allowing the use of the best estimate of selling price in addition to Vendor Specific Objective
Evidence and third-party evidence (or TPE) for determining the selling price of a deliverable. A
vendor is now required to use its best estimate of the selling price when Vendor Specific Objective
Evidence or TPE of the selling price cannot be determined. In addition, the residual method of
allocating arrangement consideration is no longer permitted.
In October 2009, the FASB issued ASU No. 2009-14, Software (ASC Topic 985), Certain Revenue
Arrangements That Include Software Elements, a consensus of the FASB Emerging Issues Task Force.
This guidance modifies the scope of ASC subtopic 965-605, Software-Revenue Recognition, to exclude
from its requirements (a) non-software components of tangible products and (b) software components
of tangible products
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that are sold, licensed or leased with tangible products when the software
components and non-software components of the tangible product function together to deliver the
tangible products essential functionality.
ASU No. 2009-13 and ASU No. 2009-14 both require expanded qualitative and quantitative
disclosures and are effective for fiscal years beginning on or after June 15, 2010. We have
adopted these updates and they did not have a material impact on our financial statements.
In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (ASC
Topic 820), Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 enhances the
disclosure requirements to include transfers in and out of Level 1 and 2 and the associated
reasons, which was effective for fiscal years beginning on or after December 15, 2009. ASU No.
2010-06 also requires the disclosure of a disaggregated gross reconciliation of Level 3 fair value
measurements, which is effective for fiscal years beginning on or after December 15, 2010. We have
adopted these updates and they did not have a material impact on our financial statements.
In July 2010, the FASB issued ASU No. 2010-20, Receivables (ASC Topic 310), Disclosures about
the Credit Quality of Financing Receivables and the Allowance for Credit Losses. ASU No. 2010-20
enhances the disclosure requirements about the credit quality and related allowance for credit
losses of financing receivables. We will be required to disclose the nature of the inherent risk of
receivables, the methodology and analytics that support that assessment, and support any changes to
the allowance for doubtful accounts. We will also be required to provide a rollforward of the
allowance and disclose the accounts receivable on a disaggregated basis. This update is effective
for fiscal years beginning on or after December 15, 2010. We have adopted this update and it did
not have a material impact on our financial statements.
NOTE B Financial Statement Components
Intangible Assets
Intangible assets included the following (in thousands):
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March 31, 2011 |
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December 31, 2010 |
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Carrying |
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Accumulated |
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Carrying |
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Accumulated |
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Amount |
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Amortization |
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Net |
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Amount |
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Amortization |
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Net |
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Subscriber relationships |
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$ |
1,930 |
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$ |
(1,930 |
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$ |
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$ |
1,930 |
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$ |
(1,930 |
) |
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$ |
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Covenants not-to-compete |
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580 |
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(290 |
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290 |
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580 |
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(290 |
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290 |
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$ |
2,510 |
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$ |
(2,220 |
) |
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$ |
290 |
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$ |
2,510 |
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$ |
(2,220 |
) |
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$ |
290 |
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There was no amortization expense for intangible assets for the three months ended March
31, 2011 or the three months ended March 31, 2010.
NOTE C Stock-Based Compensation
Our equity compensation plans provide for the grant of incentive and nonqualified stock
options, as well as other stock-based awards, to employees, non-employee directors and other
consultants who provide services to us. Stock options generally vest over three to four years and
have a contractual term of ten years from the date of grant. At March 31, 2011, there were
approximately 834,000 shares available for grant under approved equity compensation plans.
We recorded stock-based compensation expense of $312,000 and $51,000 for the three months
ended March 31, 2011 and 2010, respectively. This expense was allocated as follows (in thousands):
7
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Three Months Ended |
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March 31, |
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2011 |
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2010 |
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Cost of revenues |
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$ |
46 |
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$ |
10 |
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Operating expenses: |
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Sales and marketing |
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89 |
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17 |
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Research and development |
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7 |
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1 |
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General and administrative |
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170 |
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23 |
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Total stock-based compensation expense |
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$ |
312 |
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$ |
51 |
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As of March 31, 2011, there was approximately $4.3 million of unrecognized stock-based
compensation expense under our equity compensation plans, which is expected to be recognized on a
straight line basis over a weighted average period of approximately two years.
Our stock option activity was as follows:
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Weighted Average |
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Options |
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Exercise Price |
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(#) |
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($/share) |
Outstanding at December 31, 2010 |
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1,549,344 |
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$ |
4.59 |
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Granted |
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235,036 |
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16.64 |
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Exercised |
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(32,116 |
) |
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0.78 |
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Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2011 |
|
|
1,752,264 |
|
|
|
6.28 |
|
|
|
|
|
|
|
|
|
|
The weighted average fair value per share of options granted during 2011 was $8.00 and
this was estimated on the date of grant using the Black-Scholes option pricing model with the
following assumptions:
|
|
|
|
|
Weighted-average volatility |
|
|
45.0 |
% |
Expected dividend yield |
|
|
0 |
% |
Expected life (in years) |
|
|
6.25 |
|
Weighted-average risk-free interest rate |
|
|
3.05 |
% |
NOTE D Income Taxes
We recorded a provision for income taxes of $29,000 and $65,000 for the three months ended
March 31, 2011 and 2010, respectively. We record our interim provision for income taxes based on
our estimated annual effective tax rate for the year. Our provision for income taxes includes
estimated federal alternative minimum taxes and state income taxes, as well as deferred tax expense resulting from the book and tax basis
difference in goodwill from a prior asset acquisition.
As of December 31, 2010, we had net operating loss carryforwards of $49.9 million for U.S.
federal tax purposes and $31.4 million for state tax purposes. These loss carryforwards expire
between 2011 and 2029. Section 382 of the U.S. Internal Revenue Code generally imposes an annual
limitation on the amount of net operating loss carryforwards that might be used to offset taxable
income when a corporation has undergone significant changes in stock ownership. We have performed
a Section 382 analysis for the time period from our inception through December 8, 2010. During
this time period it was determined that we had six separate ownership changes under Section 382.
We believe that approximately $17.6 million of federal losses and $7.0 million of state losses will
expire unused due to Section 382 limitations. This limitation could be further restricted if
ownership changes occur in future years. Our deferred tax asset is reported net of this
limitation.
8
Realization of our net operating loss carryforwards and other deferred tax temporary
differences are contingent upon future taxable earnings. Our net deferred tax assets have been
reduced fully by a valuation allowance, as realization is not considered to be likely based on an
assessment of the history of losses and the likelihood of sufficient future taxable income. Our
deferred tax liability relates to goodwill created in a prior asset acquisition which is deductible
for tax purposes.
We are subject to income taxes in the U.S. federal jurisdiction and various state
jurisdictions. As of March 31, 2011, we are generally subject to U.S. federal and state tax
examinations for all tax years prior to 2009 due to net operating loss carryforwards.
As of March 31, 2011, we do not have any unrecognized tax benefits. It is our practice to
recognize interest and penalties accrued on any unrecognized tax benefits as a component of income
tax expense. We do not expect any material changes in our unrecognized tax positions over the next
12 months.
NOTE E Net Income Per Share
Basic net income per share has been computed using the weighted average number of shares of
common stock outstanding during each period. Diluted net income per share also includes the impact
of our outstanding potential common shares, such as options, warrants and redeemable convertible
preferred stock. Potential common shares that are anti-dilutive are excluded from the calculation
of diluted net income per share.
The following table presents the components of the computation of basic and diluted net income
per share for the periods indicated (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
Numerator: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
492 |
|
|
$ |
919 |
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic |
|
|
11,864 |
|
|
|
327 |
|
Options and warrants to purchase common and |
|
|
|
|
|
|
|
|
preferred stock |
|
|
834 |
|
|
|
1,104 |
|
Redeemable convertible preferred stock |
|
|
|
|
|
|
8,094 |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, diluted |
|
|
12,698 |
|
|
|
9,525 |
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.04 |
|
|
$ |
2.81 |
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.04 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
The following outstanding options, warrants and redeemable convertible preferred stock
were excluded from the computation of diluted net income per share for the periods indicated
because they were anti-dilutive (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2011 |
|
2010 |
Options and warrants to purchase common and
preferred stock |
|
|
235 |
|
|
|
1 |
|
Redeemable convertible preferred stock |
|
|
|
|
|
|
|
|
9
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a leading provider of on-demand supply chain management solutions, providing
integration, collaboration, connectivity, visibility and data analytics to thousands of trading
partners worldwide. We provide our solutions through SPSCommerce.net, a hosted software suite that
improves the way suppliers, retailers, distributors and other trading partners manage and fulfill
orders. We deliver our solutions to our customers over the Internet using a Software-as-a-Service
model.
We plan to grow our business by further penetrating the supply chain management market,
increasing revenues from our customers as their businesses grow, expanding our distribution
channels, expanding our international presence and developing new solutions and applications. We
also intend to selectively pursue acquisitions that will add customers, allow us to expand into new
regions or industries or allow us to offer new functionalities.
Key Financial Terms and Metrics
We have several key financial terms and metrics, including annualized average recurring
revenues per recurring revenue customer. During the three months ended March 31, 2011, there were
no changes in the definitions of our key financial terms and metrics, which are discussed in more
detail under the heading Managements Discussion and Analysis of Financial Condition and Results
of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2010 as
filed with the Securities and Exchange Commission on March 3, 2011.
To supplement our financial statements, we also provide investors with Adjusted EBITDA and
non-GAAP net income per share, both of which are non-GAAP financial measures. We believe that
these non-GAAP measures provide useful information to management and investors regarding certain
financial and business trends relating to our financial condition and results of operations. Our
management uses these non-GAAP measures to compare the companys 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. These measures are also
presented to our board of directors.
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 companys financial statements and are subject to inherent
limitations. Investors should review the reconciliations of non-GAAP financial measures to the
comparable GAAP financial measures that are included in this Managements Discussion and Analysis
of Financial Condition and Results of Operations.
Critical Accounting Policies and Estimates
This discussion of our financial condition and results of operations is based upon our
financial statements, which are prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial statements requires
us to make estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues, costs and expenses and related disclosures. We base our estimates of the
carrying value of certain assets and liabilities on historical experience and on various other
assumptions that we believe to be reasonable. On an ongoing basis, we evaluate our estimates and
assumptions. Our actual results may differ from these estimates under different assumptions or
conditions.
We believe that of our significant accounting policies, the following accounting policies
involve a greater degree of judgment, complexity and effect on materiality. A critical accounting
policy is one that is both material to the presentation of our financial statements and requires us
to make difficult, subjective or complex judgments for uncertain matters that could have a material
effect on our financial condition and results of operations. Accordingly, we believe that our
policies for revenue recognition, the allowance for doubtful accounts, income taxes, stock-based
10
compensation and the valuation of goodwill are the most critical to aid in fully understanding
and evaluating our financial condition and results of operations.
During the three months ended March 31, 2011, there were no significant changes in our
critical accounting policies or estimates. See Note A to our financial statements included
elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year
ended December 31, 2010 as filed with the Securities and Exchange Commission on March 3, 2011 for
additional information regarding our critical accounting policies, as well as a description of our
other significant accounting policies.
Results of Operations
The following table presents our results of operations for the periods indicated (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
March 31, |
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
|
|
|
|
|
% of revenue |
|
|
|
|
|
|
% of revenue |
|
|
$ |
|
|
% |
|
Revenues |
|
$ |
12,649 |
|
|
|
100.0 |
% |
|
$ |
10,243 |
|
|
|
100.0 |
% |
|
$ |
2,406 |
|
|
|
23.5 |
% |
Cost of revenues |
|
|
3,321 |
|
|
|
26.3 |
|
|
|
2,981 |
|
|
|
29.1 |
|
|
|
340 |
|
|
|
11.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
9,328 |
|
|
|
73.7 |
|
|
|
7,262 |
|
|
|
70.9 |
|
|
|
2,066 |
|
|
|
28.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
5,126 |
|
|
|
40.5 |
|
|
|
3,507 |
|
|
|
34.2 |
|
|
|
1,619 |
|
|
|
46.2 |
|
Research and development |
|
|
1,240 |
|
|
|
9.8 |
|
|
|
1,043 |
|
|
|
10.2 |
|
|
|
197 |
|
|
|
18.9 |
|
General and administrative |
|
|
2,455 |
|
|
|
19.4 |
|
|
|
1,665 |
|
|
|
16.3 |
|
|
|
790 |
|
|
|
47.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
8,821 |
|
|
|
69.7 |
|
|
|
6,215 |
|
|
|
60.7 |
|
|
|
2,606 |
|
|
|
41.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
507 |
|
|
|
4.0 |
|
|
|
1,047 |
|
|
|
10.2 |
|
|
|
(540 |
) |
|
|
(51.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
(45 |
) |
|
|
(0.4 |
) |
|
|
45 |
|
|
|
(100.0 |
) |
Interest income |
|
|
32 |
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
32 |
|
|
|
* |
|
Other expense |
|
|
(18 |
) |
|
|
(0.1 |
) |
|
|
(18 |
) |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net |
|
|
14 |
|
|
|
0.1 |
|
|
|
(63 |
) |
|
|
(0.6 |
) |
|
|
77 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
521 |
|
|
|
4.1 |
|
|
|
984 |
|
|
|
9.6 |
|
|
|
(463 |
) |
|
|
(47.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(29 |
) |
|
|
(0.2 |
) |
|
|
(65 |
) |
|
|
(0.6 |
) |
|
|
36 |
|
|
|
(55.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
492 |
|
|
|
3.9 |
|
|
$ |
919 |
|
|
|
9.0 |
|
|
|
(427 |
) |
|
|
(46.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to rounding, totals may not equal the sum of the line items in the table above.
* Percentage is not meaningful.
Three Months Ended March 31, 2011 compared to Three Months Ended March 31, 2010
Revenues. Revenues for the three months ended March 31, 2011 increased $2.4 million, or 23%,
to $12.6 million from $10.2 million for the same period in 2010. Our fiscal quarter ended March
31, 2011 represented our 41st consecutive quarter of increased revenues. The increase
in revenues resulted from a 14% increase in recurring revenue customers to 13,040 at March 31, 2011
from 11,392 at March 31, 2010, as well as a 9% increase in annualized average recurring revenues
per recurring revenue customer to $3,291 for the three months ended March 31, 2011 from $3,008 for
the same period in 2010. The increase in annualized average recurring revenues per recurring
revenue customer was primarily attributable to increased fees resulting from increased usage of our
solutions by our recurring revenue customers. Recurring revenues from recurring revenue customers
accounted for 83% of our total revenues for the three months ended March 31, 2011, compared to 82%
for the same period in 2010. We anticipate that the number of recurring revenue customers and the
recurring revenues per recurring
11
revenue customer will continue to increase as we increase the
number of solutions we offer, such as the Trading Partner Intelligence solution we introduced in
late 2009, and increase the penetration of those solutions across our customer base.
Cost of Revenues. Cost of revenues for the three months ended March 31, 2011 increased
$340,000, or 11%, to $3.3 million from $3.0 million for the same period in 2010. The increase in
costs was primarily attributable to higher costs of personnel, depreciation and stock-based
compensation, slightly offset by decreased consulting expenses. As a percentage of revenues, cost
of revenues was 26% for the three months ended March 31, 2011,
compared to 29% for the same period in 2010. Increased revenues allowed us to leverage our
personnel and infrastructure costs and decrease our cost of revenues as a percentage of total
revenues. Going forward, we anticipate that cost of revenues will increase in absolute dollars as
we continue to build our business.
Sales and Marketing Expenses. Sales and marketing expenses for the three months ended March
31, 2011 increased $1.6 million, or 46%, to $5.1 million from $3.5 million for the same period in
2010. The increase in sales and marketing expenses was due to increased personnel costs, higher
commissions earned by sales personnel from new business, and increased promotional and stock-based
compensation costs. As a percentage of revenues, sales and marketing expenses were 41% for the
three months ended March 31, 2011, compared to 34% for the same period in 2010. As we build our
business, we will continue to add resources to our sales and marketing efforts over time, and we
expect that these expenses will increase in absolute dollars.
Research and Development Expenses. Research and development expenses for the three months
ended March 31, 2011 increased $200,000, or 19%, to $1.2 million from $1.0 million for the same
period in 2010. The increase in research and development expenses was due to increased personnel
costs, slightly offset by decreased consulting fees. As a percentage of revenues, research and
development expenses were 10% for each of the three months ended March 31, 2011 and 2010. We
expect research and development expenses will increase in absolute dollars as we continue to
enhance and expand our solutions and applications.
General and Administrative Expenses. General and administrative expenses for the three months
ended March 31, 2011 increased $800,000, or 47%, to $2.5 million from $1.7 million for the same
period in 2010. The increase in general and administrative expenses was due to increased expenses
related to being a public company, including legal and accounting fees, as well as increased
stock-based compensation expense. As a percentage of revenues, general and administrative expenses
were 19% for the three months ended March 31, 2011, compared to 16% for the same period in 2010.
Going forward, we expect that general and administrative expenses will increase in absolute
dollars.
Other Income (Expense). We did not incur any interest expense for the three months ended
March 31, 2011 as our capital lease obligations were fully repaid in early January 2011. For the
same period in 2010, interest expense was $45,000 and was related to outstanding indebtedness under
our equipment loans and credit facility, which were repaid in the second quarter of 2010, as well
as our capital lease obligations. Interest income for the three months ended March 31, 2011 was
$32,000 as the result of interest earned on the net cash proceeds from our initial public offering
in April 2010. Other expense was $18,000 for each of the three months ended March 31, 2011 and
2010.
Income Tax Expense. Income tax expense was $29,000 for the three months ended March 31, 2011,
compared to $65,000 for the three months ended March 31, 2010. We record our interim provision for
income taxes based on our estimated annual effective tax rate for the year. Our provision for
income taxes includes estimated federal alternative minimum taxes and state income taxes, as well
as deferred tax expense resulting from the book and tax basis difference in goodwill from a prior
asset acquisition.
Adjusted EBITDA. Adjusted EBITDA, which is a non-GAAP measure of financial performance,
consists of net income plus depreciation and amortization, interest expense, interest income,
income tax expense and non-cash, stock-based compensation expense. We use Adjusted EBITDA as a
measure of operating performance because it assists us in comparing performance on a consistent
basis, as it removes from our operating results the impact of our capital structure. We believe
Adjusted EBITDA is useful to an investor in evaluating our operating performance because it is
widely used to measure a companys operating performance without regard to items such as
depreciation and amortization, which can vary depending upon accounting methods and the book value
of assets,
12
and to present a meaningful measure of corporate performance exclusive of our capital structure and
the method by which assets were acquired.
The following table provides a reconciliation of net income to Adjusted EBITDA (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
Net income |
|
$ |
492 |
|
|
$ |
919 |
|
Depreciation and amortization |
|
|
422 |
|
|
|
342 |
|
Interest expense |
|
|
|
|
|
|
45 |
|
Interest income |
|
|
(32 |
) |
|
|
|
|
Income tax expense |
|
|
29 |
|
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
911 |
|
|
|
1,371 |
|
Stock-based compensation expense |
|
|
312 |
|
|
|
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
1,223 |
|
|
$ |
1,422 |
|
|
|
|
|
|
|
|
Non-GAAP Net Income per Share. Non-GAAP net income per share, which is also a non-GAAP
measure of financial performance, consists of net income plus non-cash, stock-based compensation
expense and amortization expense related to intangible assets divided by the weighted average
number of shares of common stock outstanding during each period. We believe non-GAAP net income
per share is useful to an investor because it is widely used to measure a companys operating
performance.
The following table provides a reconciliation of net income to non-GAAP net income per share
(in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2011 |
|
|
2010 |
|
Net income |
|
$ |
492 |
|
|
$ |
919 |
|
Stock-based compensation expense |
|
|
312 |
|
|
|
51 |
|
Amortization of intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income |
|
$ |
804 |
|
|
$ |
970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute non-GAAP net income |
|
|
|
|
|
|
|
|
per share |
|
|
|
|
|
|
|
|
Basic |
|
|
11,864 |
|
|
|
327 |
|
Diluted |
|
|
12,698 |
|
|
|
9,525 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.07 |
|
|
$ |
2.97 |
|
Diluted |
|
$ |
0.06 |
|
|
$ |
0.10 |
|
13
Liquidity and Capital Resources
At March 31, 2011, our principal sources of liquidity were cash and cash equivalents of $40.4
million and accounts receivable, net of allowance for doubtful accounts, of $6.4 million. Our
working capital at March 31, 2011 was $43.5 million compared to $42.6 million at December 31, 2010.
The increase in working capital from December 31, 2010 to March 31, 2011 resulted primarily from
the following:
|
|
|
$782,000 increase in net accounts receivable, due to new business for the three
months ended March 31, 2011; |
|
|
|
|
$167,000 increase in deferred costs, current, for expenses related to increased
implementation resources and commission payments for new business; |
|
|
|
|
$360,000 increase in prepaid expenses and other current assets, related to the
renewal of a prepaid service contract; |
|
|
|
|
$122,000 decrease in capital lease obligations, current, as all of our outstanding
capital leases were repaid; |
|
|
|
|
$581,000 increase in accounts payable, primarily due to timing of payments for
equipment purchases, professional services and rent; |
|
|
|
|
$215,000 decrease in accrued compensation and benefits, due to payments made in
early 2011 for bonuses accrued as of December 31, 2010; and, |
|
|
|
|
$137,000 increase in accrued expenses and other current liabilities, primarily due
to an increase in accruals for professional services; |
Net Cash Flows from Operating Activities
Net cash provided by operating activities was $560,000 for the three months ended March 31,
2011 compared to $254,000 for the same period in 2010. The approximate $400,000 decrease in net
income was more than offset by the changes in non-cash expenses, including increased stock-based
compensation, and the changes in working capital accounts as discussed above.
Net Cash Flows from Investing Activities
Net cash used in investing activities was $488,000 for the three months ended March 31, 2011
and $130,000 for the same period in 2010, all for capital expenditures. Our capital expenditures
are for supporting our business growth and existing customer base, as well as for our internal use
such as equipment for our employees.
Net Cash Flows from Financing Activities
Net cash used in financing activities was $98,000 for the three months ended March 31, 2011,
representing payments of capital lease obligations slightly offset by net proceeds from the
exercise of stock options. Net cash used in financing activities was $59,000 for the three months
ended March 31, 2010, representing net repayments on outstanding indebtedness.
Credit Facility
We terminated our previous credit facility with BlueCrest Venture Finance Master Fund Limited
effective March 31, 2010. We continue to review our future needs for a credit facility.
Adequacy of Capital Resources
Our future capital requirements may vary significantly from those now planned and will depend
on many factors, including the costs to develop and implement new solutions and applications, the
sales and marketing resources needed to further penetrate our market and gain acceptance of new
solutions and applications we develop, the expansion of our operations in the United States and
internationally, the response of competitors to our solutions
and applications and our use of capital for acquisitions, if any. Historically, we have
experienced increases in our
14
expenditures consistent with the growth in our operations and
personnel, and we anticipate that our expenditures will increase as we continue to grow our
business.
We believe our cash and cash equivalents and cash flows from our operations will be sufficient
to meet our working capital and capital expenditure requirements for at least the next twelve
months.
Inflation and changing prices did not have a material effect on our business during the three
months ended March 31, 2011. We do not expect that inflation or changing prices will materially
affect our business in the foreseeable future.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, investments in special purpose entities or
undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or
synthetic leases.
Recent Accounting Pronouncements
See Note A to our financial statements elsewhere in this Quarterly Report on Form 10-Q and in
our Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities
and Exchange Commission on March 3, 2011 for a full description of recent accounting
pronouncements, including the respective expected dates of adoption and effects on our results of
operations and financial condition.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not
required to provide the information required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, our management has
evaluated, under the supervision and with the participation of our Chief Executive Officer and
Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Disclosure controls and
procedures are designed to ensure that information required to be disclosed in our reports filed
under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules and forms and that
such information is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures were effective as of March 31, 2011.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter
ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings. From time to time, however,
we may be engaged in legal actions arising from our normal business activities. Any such actions,
even those that lack merit, could result in the expenditure of significant financial and managerial
resources.
Item 1A. Risk Factors
There have been no material changes in our risk factors from those disclosed under the heading
Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2010 as filed with
the Securities and Exchange Commission on March 3, 2011.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits
The exhibits filed as part of this Quarterly Report on Form 10-Q are listed in the Exhibit
Index immediately following the signatures to this report.
16
SIGNATURES
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 thereunto duly authorized.
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Dated: May 5, 2011 |
SPS COMMERCE, INC.
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/s/ KIMBERLY K. NELSON
|
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Kimberly K. Nelson |
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Executive Vice President and Chief Financial Officer
(principal financial and accounting officer) |
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17
EXHIBIT INDEX
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rules
13a-14(a) under the Securities Exchange Act of 1934, as amended
(filed herewith). |
|
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rules
13a-14(a) under the Securities Exchange Act of 1934, as amended
(filed herewith). |
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
18
exv31w1
EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Archie C. Black, certify that:
|
1. |
|
I have reviewed this Quarterly Report on Form 10-Q of SPS Commerce, Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the Registrant as of, and for, the periods
presented in this report; |
|
|
4. |
|
The Registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
|
a. |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
|
|
b. |
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles; |
|
|
c. |
|
Evaluated the effectiveness of the Registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and |
|
|
d. |
|
Disclosed in this report any change in the Registrants internal
control over financial reporting that occurred during the Registrants most recent
fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect,
the Registrants internal control over financial reporting; and |
|
5. |
|
The Registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the Registrants
auditors and the audit committee of the Registrants board of directors (or persons
performing the equivalent functions): |
|
a. |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely
to adversely affect the Registrants ability to record, process, summarize and
report financial information; and |
|
|
b. |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal control over
financial reporting. |
|
|
|
|
|
|
|
|
|
/s/ ARCHIE C. BLACK
|
|
|
Archie C. Black |
|
|
President and Chief Executive Officer
(principal executive officer) |
|
May 5, 2011
19
exv31w2
EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Kimberly K. Nelson, certify that:
|
1. |
|
I have reviewed this Quarterly Report on Form 10-Q of SPS Commerce, Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the Registrant as of, and for, the periods
presented in this report; |
|
|
4. |
|
The Registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
|
a. |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
|
|
b. |
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles; |
|
|
c. |
|
Evaluated the effectiveness of the Registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and |
|
|
d. |
|
Disclosed in this report any change in the Registrants internal
control over financial reporting that occurred during the Registrants most recent
fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect,
the Registrants internal control over financial reporting; and |
|
5. |
|
The Registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the Registrants
auditors and the audit committee of the Registrants board of directors (or persons
performing the equivalent functions): |
|
a. |
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely
to adversely affect the Registrants ability to record, process, summarize and
report financial information; and |
|
|
b. |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal control over
financial reporting. |
|
|
|
|
|
|
|
|
|
/s/ KIMBERLY K. NELSON
|
|
|
Kimberly K. Nelson |
|
|
Executive Vice President and Chief Financial Officer
(principal financial and accounting officer) |
|
May 5, 2011
20
exv32w1
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. §1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of SPS Commerce, Inc. (the Company) for
the period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date
hereof (the Report), the undersigned, the Chief Executive Officer and the Chief Financial Officer
of the Company, hereby certify, pursuant to and for purposes of 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
1. |
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and |
|
|
2. |
|
The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company. |
|
|
|
|
|
|
|
|
|
/s/ ARCHIE C. BLACK
|
|
|
Archie C. Black |
|
|
President and Chief Executive Officer |
|
|
|
|
|
|
/s/ KIMBERLY K. NELSON
|
|
|
Kimberly K. Nelson |
|
|
Executive Vice President and Chief Financial Officer |
|
May 5, 2011
21