Form 8-K
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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

                           February 9, 2023                           

Date of report (Date of earliest event reported)

                    SPS COMMERCE, INC.                    

(Exact Name of Registrant as Specified in its Charter)

Delaware    001-34702    41-2015127
(State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

 

333 South Seventh Street, Suite 1000

Minneapolis, Minnesota

           

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 (see General Instruction A.2. below):

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 February 9, 2023, we issued a press release disclosing our results of operations and financial condition for the fourth quarter and year ended December 31, 2022. 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

Exhibit No. Exhibit
   
99 Press Release dated February 9, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

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 hereunto duly authorized.

 SPS COMMERCE, INC.
   
  
Date: February 9, 2023By: /s/ KIMBERLY NELSON                                       
  Kimberly Nelson
  Executive Vice President and Chief Financial Officer
  

 

EdgarFiling

EXHIBIT 99

SPS Commerce Reports Fourth Quarter and Fiscal Year 2022 Financial Results

Company delivers 88th consecutive quarter of topline growth

Fourth quarter 2022 revenue grew 19% and recurring revenue grew 20% from the fourth quarter of 2021

MINNEAPOLIS, Feb. 09, 2023 (GLOBE NEWSWIRE) --  SPS Commerce, Inc. (Nasdaq: SPSC), a leader in retail cloud services, today announced financial results for the fourth quarter and year ended December 31, 2022.

Financial Highlights

Fourth Quarter 2022 Financial Highlights

Fiscal Year 2022 Financial Highlights

“Over the years, SPS Commerce has consistently executed on our mission to connect all retail trading partners through the easiest-to-join and use network,” said Archie Black, CEO of SPS Commerce. “We remained laser focused on improving customer experience and made strategic investments which helped us build the world’s largest cloud retail network and position SPS Commerce for continued success.”

“SPS Commerce achieved strong fourth quarter and full year 2022 results. We continued to deliver profitable growth and invest in the future to capitalize on existing and new opportunities across our expanding addressable market,” said Kim Nelson, CFO of SPS Commerce.

Guidance

First Quarter 2023 Guidance

Fiscal Year 2023 Guidance

The forward-looking measures and the underlying assumptions involve significant known and unknown risks and uncertainties, and actual results may vary materially. The Company does not present a reconciliation of the forward-looking non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, and non-GAAP income per share, to the most directly comparable GAAP financial measures because it is impractical to forecast certain items without unreasonable efforts due to the uncertainty and inherent difficulty of predicting, within a reasonable range, the occurrence and financial impact of and the periods in which such items may be recognized.

Quarterly Conference Call

To access the call, please dial 1-833-816-1382, or outside the U.S. 1-412-317-0475 at least 15 minutes prior to the 3:30 p.m. CT start time. Please ask to be joined into the SPS Commerce Q4 2022 conference call. A live webcast of the call will also be available at http://investors.spscommerce.com under the Events and Presentations menu. The replay will also be available on our website at http://investors.spscommerce.com.

About SPS Commerce

SPS Commerce is the world’s leading retail network, connecting trading partners around the globe to optimize supply chain operations for all retail partners. We support data-driven partnerships with innovative cloud technology, customer-obsessed service and accessible experts so our customers can focus on what they do best. To date, more than 115,000 companies in retail, grocery, distribution, supply, and logistics have chosen SPS as their retail network. SPS has achieved 88 consecutive quarters of revenue growth and is headquartered in Minneapolis. For additional information, contact SPS at 866-245-8100 or visit www.spscommerce.com.

SPS COMMERCE, SPS, SPS logo, 1=INFINITY logo, AS THE NETWORK GROWS, SO DOES YOUR OPPORTUNITY, INFINITE RETAIL POWER, MASTERING THE RETAIL GAME and RSX are marks of SPS Commerce, Inc. and Registered in the U.S. Patent and Trademark Office. IN:FLUENCE, and others are further marks of SPS Commerce, Inc. These marks may be registered or otherwise protected in other countries. 

SPS-F

Use of Non-GAAP Financial Measures

To supplement our consolidated financial statements, we provide investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income per share, all of which are non-GAAP financial measures. We believe that these non-GAAP financial measures provide useful information to our management, board of directors, and investors regarding certain financial and business trends relating to our financial condition and results of operations.

Our management uses these non-GAAP financial measures to compare our 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. We believe these non-GAAP financial measures are useful to an investor as they are widely used in evaluating operating performance. Adjusted EBITDA and Adjusted EBITDA Margin are used to measure 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 capital structure and the method by which assets were acquired.

These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in our consolidated 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 press release.

Adjusted EBITDA Measures:

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

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

Non-GAAP Income Per Share Measure:

Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain or loss from foreign currency on cash and investments held, other adjustments as necessary for a fair presentation, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period.

To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. 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.

Forward-Looking Statements

This press release may contain forward-looking statements, including information about management's view of SPS Commerce's future expectations, plans and prospects, including our views regarding future execution within our business, the opportunity we see in the retail supply chain world and our performance for the first quarter and fiscal year of 2023, 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, 2021, 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.
CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except shares)
 December 31,
  2022   2021 
ASSETS   
Current assets   
Cash and cash equivalents$162,893  $207,552 
Short-term investments 51,412   49,758 
Accounts receivable 42,501   38,811 
Allowance for credit losses (3,066)  (4,249)
Accounts receivable, net 39,435   34,562 
Deferred costs 52,755   44,529 
Other assets 16,319   16,042 
Total current assets 322,814   352,443 
Property and equipment, net 35,458   31,901 
Operating lease right-of-use assets 9,170   10,851 
Goodwill 197,284   143,663 
Intangible assets, net 88,352   58,587 
Other assets   
Deferred costs, non-current 17,424   15,191 
Deferred income tax assets 227   182 
Other assets, non-current 2,185   3,028 
Total assets$672,914  $615,846 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities   
Accounts payable$11,256  $8,330 
Accrued compensation 30,235   31,661 
Accrued expenses 7,451   8,345 
Deferred revenue 57,423   50,428 
Operating lease liabilities 4,277   4,108 
Total current liabilities 110,642   102,872 
Other liabilities   
Deferred revenue, non-current 4,771   5,144 
Operating lease liabilities, non-current 13,009   16,426 
Deferred income tax liabilities 7,419   7,145 
Total liabilities 135,841   131,587 
Commitments and contingencies   
Stockholders' equity   
Preferred stock     
Common stock 38   38 
Treasury Stock (128,892)  (85,677)
Additional paid-in capital 476,117   433,258 
Retained earnings 193,221   138,087 
Accumulated other comprehensive loss (3,411)  (1,447)
Total stockholders’ equity 537,073   484,259 
Total liabilities and stockholders’ equity$672,914  $615,846 

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


SPS COMMERCE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands, except per share amounts)

 
 Three Months Ended
December 31,
 Year Ended
December 31,
  2022  2021   2022  2021 
Revenues$122,018 $102,756  $450,875 $385,276 
Cost of revenues 41,541  35,635   153,065  131,678 
Gross profit 80,477  67,121   297,810  253,598 
Operating expenses       
Sales and marketing 27,201  22,658   101,772  88,044 
Research and development 12,480  10,579   45,748  39,038 
General and administrative 17,950  16,119   67,340  61,305 
Amortization of intangible assets 3,832  2,392   11,768  10,126 
Total operating expenses 61,463  51,748   226,628  198,513 
Income from operations 19,014  15,373   71,182  55,085 
Other income (expense), net 1,752  (120)  142  (1,544)
Income before income taxes 20,766  15,253   71,324  53,541 
Income tax expense 4,851  2,488   16,190  8,944 
Net income$15,915 $12,765  $55,134 $44,597 
        
Net income per share       
Basic$0.44 $0.35  $1.53 $1.24 
Diluted$0.43 $0.34  $1.49 $1.21 
        
Weighted average common shares used to compute net income per share       
Basic 36,159  36,091   36,117  35,928 
Diluted 36,971  37,135   36,953  36,962 

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


SPS COMMERCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
  
 Year Ended
December 31,
  2022   2021 
Cash flows from operating activities   
Net income$55,134  $44,597 
Reconciliation of net income to net cash provided by operating activities   
Deferred income taxes (3,732)  3,881 
Depreciation and amortization of property and equipment 16,421   14,788 
Amortization of intangible assets 11,768   10,126 
Provision for credit losses 3,359   4,717 
Stock-based compensation 33,399   27,574 
Other, net 220   323 
Changes in assets and liabilities, net of effects of acquisitions   
Accounts receivable (6,435)  (4,959)
Deferred costs (10,646)  (9,299)
Other current and non-current assets 2,632   (6,181)
Accounts payable 144   2,259 
Accrued compensation (3,786)  6,775 
Accrued expenses (2,829)  1,017 
Deferred revenue 5,965   14,483 
Operating leases (1,562)  2,792 
Net cash provided by operating activities 100,052   112,893 
Cash flows from investing activities   
Purchases of property and equipment (19,880)  (19,588)
Purchases of investments (160,427)  (121,242)
Maturities of investments 158,937   111,193 
Acquisitions of businesses, net (91,420)  (17,066)
Net cash used in investing activities (112,790)  (46,703)
Cash flows from financing activities   
Repurchases of common stock (43,215)  (20,430)
Net proceeds from exercise of options to purchase common stock 4,908   9,374 
Net proceeds from employee stock purchase plan activity 6,676   4,737 
Payment for contingent consideration    (2,042)
Net cash used in financing activities (31,631)  (8,361)
Effect of foreign currency exchange rate changes on cash and cash equivalents (290)  31 
Net increase (decrease) in cash and cash equivalents (44,659)  57,860 
Cash and cash equivalents at beginning of year 207,552   149,692 
Cash and cash equivalents at end of year$162,893  $207,552 

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


SPS COMMERCE, INC.
NON-GAAP RECONCILIATION
(Unaudited; in thousands, except per share amounts)
Adjusted EBITDA
 Three Months Ended
December 31,
 Year Ended
December 31,
  2022   2021   2022   2021 
Net income$           15,915  $           12,765  $           55,134  $           44,597 
Income tax expense                 4,851                   2,488                 16,190                   8,944 
Depreciation and amortization of property and equipment                 4,438                   3,799                 16,421                 14,788 
Amortization of intangible assets                 3,832                   2,392                 11,768                 10,126 
Stock-based compensation expense                 7,763                   6,301                 33,399                 27,574 
Realized (gain) loss from foreign currency on cash and investments held                   (984)                      (36)                  1,026                   1,456 
Investment income                   (864)                      (36)                (1,670)                    (278)
Other                       —                         21                         —                     (192)
Adjusted EBITDA$           34,951  $           27,694  $         132,268  $         107,015 


Adjusted EBITDA Margin
 Three Months Ended
December 31,
 Year Ended
December 31,
  2022   2021   2022   2021 
Revenue$122,018  $102,756  $450,875  $385,276 
        
Net income 15,915   12,765   55,134   44,597 
Margin 13%  12%  12%  12%
        
Adjusted EBITDA 34,951   27,694   132,268   107,015 
Adjusted EBITDA Margin       29%        27%        29%        28%


Non-GAAP Income
 Three Months Ended
December 31,
 Year Ended
December 31,
  2022   2021   2022   2021 
Net income$           15,915  $           12,765  $           55,134  $           44,597 
Stock-based compensation expense                7,763                  6,301                33,399                27,574 
Amortization of intangible assets                3,832                  2,392                11,768                10,126 
Realized (gain) loss from foreign currency on cash and investments held                  (984)                     (36)                 1,026                  1,456 
Other                      —                        21                        —                    (192)
Income tax effects of adjustments               (3,063)                (4,302)             (14,639)             (16,454)
Non-GAAP income$           23,463  $           17,141  $           86,688  $           67,107 
        
Shares used to compute non-GAAP income per share       
Basic              36,159                36,091                36,117                35,928 
Diluted              36,971                37,125                36,953                36,962 
        
Non-GAAP income per share       
Basic$               0.65  $               0.47  $               2.40  $               1.87 
Diluted$               0.63  $               0.46  $               2.35  $               1.82 

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

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