• Q4 2024 Revenue: $170.9 million, an 18% increase year-over-year.
• Q4 2024 Recurring Revenue Growth: 19% year-over-year.
• Q4 2024 Adjusted EBITDA: $49.6 million, an 18% increase.
• Full Year 2024 Revenue: $637.8 million, a 19% increase.
• Full Year 2024 Recurring Revenue Growth: 20%.
• Full Year 2024 Adjusted EBITDA: $186.6 million, an 18% increase.
• Total Cash and Investments at Year-End: $241 million.
• Recurring Revenue Customers: Approximately 45,350.
• Wallet Share: Approximately $13,300.
• Q1 2025 Revenue Guidance: $178.5 million to $180 million, 19% to 20% growth.
• Q1 2025 Adjusted EBITDA Guidance: $49.5 million to $50.5 million.
• Q1 2025 Fully Diluted EPS Guidance: $0.39 to $0.41.
• Full Year 2025 Revenue Guidance: $758 million to $763 million, 19% to 20% growth.
• Full Year 2025 Adjusted EBITDA Guidance: $227.5 million to $231 million, 22% to 24% growth.
• Full Year 2025 Fully Diluted EPS Guidance: $1.93 to $1.99.
• Full Year 2025 Non-GAAP Diluted Income Per Share Guidance: $3.78 to $3.84.

• Warning! GuruFocus has detected 2 Warning Sign with SPSC.

Release Date: February 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SPS Commerce Inc (NASDAQ:SPSC) reported a strong revenue growth of 19% for the full year 2024, reaching $637.8 million.
• Recurring revenue grew by 20%, with fulfillment growth at 20% and analytics growth at 8%.
• The company successfully completed acquisitions, including Vision33's SAP Business One integration technology, Traverse Systems, SupplyPike, and Carbon6, enhancing their product portfolio.
• SPS Commerce Inc (NASDAQ:SPSC) expanded its addressable market to $11.1 billion globally, with $6.5 billion in the US, indicating significant growth potential.
• The company maintained a strong financial position with total cash and investments of $241 million at the end of 2024.

Negative Points

• Analytics growth slowed to 8% in 2024, down from 10% in previous years, indicating potential challenges in this segment.
• The company's guidance for 2025 suggests a moderation in organic revenue growth, potentially due to macroeconomic factors.
• There is a risk of customer attrition due to international exposure and tariff uncertainties.
• The integration of recent acquisitions like Carbon6 and SupplyPike may pose challenges and could be EBITDA margin dilutive in the short term.
• The company's analytics product is more susceptible to changes in the retail macro environment, which could impact future growth.

Q & A Highlights

Q: Can you elaborate on the new Total Addressable Market (TAM) analysis and the significant increase in wallet share? A: Chadwick Collins, CEO, explained that the TAM analysis involved extensive work with a strategy consulting firm to identify applicable industries and potential customers. The analysis revealed a larger potential customer base and a significant increase in wallet share. This was validated by existing customers exceeding target wallet share, indicating potential for growth.

Q: How does the pipeline of enablement campaigns look for 2025, and what is the expected mix of new logos versus wallet share growth? A: Kimberly Nelson, CFO, stated that the company is optimistic about the enablement campaigns for 2025. The mix of customer count versus wallet share is expected to be similar to Q4, with opportunities for growth in both areas.

Q: With the focus on traceability, especially in the grocery segment, how does this impact fulfillment and tracking? A: Chadwick Collins, CEO, noted that government-mandated traceability requirements increase the need for collaboration between suppliers and buyers. This has driven interest in connecting traceability data from suppliers to buying organizations, particularly in food safety.

Q: How does the recent acquisition of Carbon6 impact your strategy, especially with Amazon's changes in package delivery? A: Chadwick Collins, CEO, mentioned that they do not expect any impact from Amazon's changes. The majority of third-party sellers use Amazon's fulfillment services, which have sufficient capacity, so no disruption is anticipated.

Q: How does the new TAM analysis affect your go-to-market strategy and resource allocation? A: Chadwick Collins, CEO, stated that the analysis reinforces their current go-to-market strategies. The community enablement and channel go-to-market approaches are effective in capturing available suppliers and addressing replacement cycles, respectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.