# SPS COMMERCE INC (SPSC)

Informational only - not investment advice.

CIK: 0001092699
SIC: 7372 Services-Prepackaged Software
SIC breadcrumb: [Services](/division/I/) > [Business Services](/major-group/73/) > [SIC 7372 Services-Prepackaged Software](/industry/7372/)
Latest 10-K filed: 2026-02-19
SEC page: https://www.sec.gov/edgar/browse/?CIK=1092699
Filing source: https://www.sec.gov/Archives/edgar/data/1092699/000109269926000012/spsc-20251231.htm

## At a glance

FY2025 · period end 2025-12-31 · filed 2026-02-19 · accession 0001092699-26-000012 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001092699.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 751,505,000 USD | 2025 | verified |
| Net income | 93,339,000 USD | 2025 | verified |
| Assets | 1,169,859,000 USD | 2025 | verified |
| Free cash flow | 152,266,000 USD | 2025 | computed |
| Net margin | 12.42% | 2025 | computed |
| Operating margin | 15.74% | 2025 | computed |
| Revenue YoY | +17.83% | 2025 | computed |
| ROE | 9.58% | 2025 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

No market price, no rating, no forecast on this site. Not investment advice.

### Peer percentile fingerprint

| Ratio | SPSC | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | 12.4% | 1.5% | 72 | 122 |
| Operating margin | 15.7% | 1.3% | 78 | 121 |
| Revenue growth | 17.8% | 13.5% | 67 | 124 |
| FCF margin | 20.3% | 19.3% | 55 | 120 |
| ROE | 9.6% | 2.0% | 65 | 112 |
| ROA | 8.0% | 0.9% | 80 | 124 |
| Liabilities / equity | 0.20 | 0.91 | 6 | 113 |
| Current ratio | 2.17 | 1.57 | 72 | 124 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 7372 Services-Prepackaged Software, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 751505000 | USD | 2025 | 2026-02-19 |
| Net income | 93339000 | USD | 2025 | 2026-02-19 |
| Assets | 1169859000 | USD | 2025 | 2026-02-19 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-19. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001092699.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 193,153,000 | 220,085,000 | 248,240,000 | 279,124,000 | 312,630,000 | 385,276,000 | 450,875,000 | 536,910,000 | 637,765,000 | 751,505,000 |
| Net income | 4,963,000 | 351,000 | 23,872,000 | 33,712,000 | 45,586,000 | 44,597,000 | 55,134,000 | 65,824,000 | 77,054,000 | 93,339,000 |
| Operating income | 6,385,000 | 9,981,000 | 26,731,000 | 38,406,000 | 50,158,000 | 55,085,000 | 71,182,000 | 77,248,000 | 88,883,000 | 118,303,000 |
| Gross profit | 128,807,000 | 146,460,000 | 166,492,000 | 186,885,000 | 212,794,000 | 253,598,000 | 297,810,000 | 354,841,000 | 427,051,000 | 519,876,000 |
| Diluted EPS | 0.29 | 0.01 | 0.68 | 0.94 | 1.26 | 1.21 | 1.49 | 1.76 | 2.04 | 2.46 |
| Operating cash flow | 18,765,000 | 31,050,000 | 55,015,000 | 71,794,000 | 88,562,000 | 112,893,000 | 100,052,000 | 132,298,000 | 157,398,000 | 178,790,000 |
| Capital expenditures | 8,008,000 | 7,271,000 | 13,750,000 | 13,585,000 | 16,467,000 | 19,588,000 | 19,880,000 | 19,761,000 | 20,046,000 | 26,524,000 |
| Share buybacks |  | 5,815,000 | 19,864,000 | 20,618,000 | 18,950,000 | 20,430,000 | 43,215,000 | 0.00 | 37,567,000 | 114,277,000 |
| Assets | 298,365,000 | 339,738,000 | 386,123,000 | 447,440,000 | 526,458,000 | 615,846,000 | 672,914,000 | 823,844,000 | 1,031,230,000 | 1,169,859,000 |
| Liabilities | 49,098,000 | 51,627,000 | 67,149,000 | 92,564,000 | 105,737,000 | 131,587,000 | 135,841,000 | 156,369,000 | 176,540,000 | 195,966,000 |
| Stockholders' equity | 257,767,000 | 288,111,000 | 318,974,000 | 354,876,000 | 420,721,000 | 484,259,000 | 537,073,000 | 667,475,000 | 854,690,000 | 973,893,000 |
| Cash and cash equivalents | 115,877,000 | 123,127,000 | 133,859,000 | 179,252,000 | 149,692,000 | 207,552,000 | 162,893,000 | 219,081,000 | 241,017,000 | 151,355,000 |
| Free cash flow | 10,757,000 | 23,779,000 | 41,265,000 | 58,209,000 | 72,095,000 | 93,305,000 | 80,172,000 | 112,537,000 | 137,352,000 | 152,266,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin | 2.57% | 0.16% | 9.62% | 12.08% | 14.58% | 11.58% | 12.23% | 12.26% | 12.08% | 12.42% |
| Operating margin | 3.31% | 4.54% | 10.77% | 13.76% | 16.04% | 14.30% | 15.79% | 14.39% | 13.94% | 15.74% |
| Return on equity | 1.93% | 0.12% | 7.48% | 9.50% | 10.84% | 9.21% | 10.27% | 9.86% | 9.02% | 9.58% |
| Return on assets | 1.66% | 0.10% | 6.18% | 7.53% | 8.66% | 7.24% | 8.19% | 7.99% | 7.47% | 7.98% |
| Liabilities / equity | 0.19 | 0.18 | 0.21 | 0.26 | 0.25 | 0.27 | 0.25 | 0.23 | 0.21 | 0.20 |
| Current ratio | 5.78 | 5.10 | 4.42 | 4.29 | 3.39 | 3.43 | 2.92 | 3.07 | 2.60 | 2.17 |

## As-reported value updates

7 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period.

Ledger: /company/SPSC/revisions/


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-07-30. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001092699.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-09-30 |  |  | 0.43 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.41 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 |  |  | 0.39 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 135,661,000 | 16,842,000 | 0.45 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 144,965,000 | 19,011,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 149,576,000 | 18,003,000 | 0.48 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 153,596,000 | 18,032,000 | 0.48 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 163,686,000 | 23,460,000 | 0.62 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 170,907,000 | 17,559,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 181,549,000 | 22,196,000 | 0.58 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 187,400,000 | 19,733,000 | 0.52 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 189,904,000 | 25,569,000 | 0.67 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 192,652,000 | 25,841,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 192,121,000 | 19,729,000 | 0.53 | reported discrete quarter |
| 2026-Q2 | 2026-06-30 | 197,815,000 | 6,864,000 | 0.19 | reported discrete quarter |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from SPSC's latest 10-K: [/company/SPSC/business/](/company/SPSC/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from SPSC's latest 10-K: [/company/SPSC/risk-factors/](/company/SPSC/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1092699/000109269926000066/spsc-20260630.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-07-30
Report date: 2026-06-30

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements regarding us, our business prospects and our results of operations 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Similarly, statements that describe our future plans, objectives or goals are also forward-looking. Forward-looking statements may also be made from time to time in oral presentations, including telephone conferences and/or webcasts open to the public. Shareholders, potential investors, and others are cautioned that all forward-looking statements involve risks and uncertainties that could cause results in future periods to differ materially from those anticipated by some of the statements made in this report, including the risks and uncertainties described under the heading “Risk Factors” appearing in our Annual Report on Form 10-K for the year ended December 31, 2025, as may be updated in our subsequent Quarterly Reports on Form 10-Q or other filings from time to time. We expressly disclaim any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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 SEC that advise interested parties of the risks and factors that may affect our business.

Overview

SPS Commerce is the leading intelligent supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations. Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.

Our network powers our portfolio of solutions that orchestrate the critical processes, protocols, and data exchanges needed to get the right product, in the right place, at the right time, every time. We have embedded deep expertise, proven processes, and compliance logic built from over 20 years of commerce intelligence into every connection, delivering a full-service experience that empowers partners to move forward faster, together.

We plan to continue 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, from time to time, developing new products and applications. We also intend to selectively pursue acquisitions that will add customers, allow us to expand into new regions, or allow us to offer new functionalities.

Key Financial Terms, Metrics and Non-GAAP Measures

We have several key financial terms, metrics, and non-GAAP measures as discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Recurring Revenue - We define recurring revenue as active contracts during the reporting period under which the customer regularly pays us fees for subscription-based and reoccurring services. All components of the contracts that are not expected to recur (primarily set-ups and professional services) are excluded from recurring revenue.

Recurring Revenue Customers - We define recurring revenue customers as customers with an active recurring revenue contract at the end of the period. A small portion of our recurring revenue customers consist of separate units within a larger organization and are separately invoiced. We treat each of these units, which may include divisions, departments, affiliates and franchises, as distinct recurring revenue customers. Following the divestiture of our 3P Revenue Recovery business on June 30, 2026, all recurring revenue customers are classified as 1P. Prior-period references to 3P relate to customers that only had an online marketplace or e-Commerce connection within our network.

[[GREPCENT_TABLE]]
[["SPS COMMERCE, INC.","21","Form 10-Q for the Quarterly Period ended June 30, 2026"]]
[[/GREPCENT_TABLE]]

Table of Contents

Annual Revenue Per User ("ARPU") - We calculate the annualized average recurring revenues per recurring revenue customer, by dividing the annualized recurring revenues for the period by the average of the beginning and ending number of recurring revenue customers for the period.

Non-GAAP Financial Measures - To supplement our condensed 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 condensed 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

[[GREPCENT_TABLE]]
[["SPS COMMERCE, INC.","22","Form 10-Q for the Quarterly Period ended June 30, 2026"]]
[[/GREPCENT_TABLE]]

Table of Contents

Results of Operations

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

The following table presents our results of operations for the periods indicated:

[[GREPCENT_TABLE]]
[["","Three Months Ended June 30,"],["","2026","","2025","","Change"],["($ in thousands)","$","","% of revenue(1)","","$","","% of revenue(1)","","$","","%"],["Revenues","$","197,815","","","100","%","","$","187,400","","","100","%","","$","10,415","","","6","%"],["Cost of revenues","59,028","","","30","","","59,826","","","32","","","(798)","","","(1)"],["Gross profit","138,787","","","70","","","127,574","","","68","","","11,213","","","9"],["Operating expenses"],["Sales and marketing","43,936","","","22","","","43,434","","","23","","","502","","","1"],["Research and development","16,957","","","9","","","17,271","","","9","","","(314)","","","(2)"],["General and administrative","36,646","","","19","","","30,890","","","16","","","5,756","","","19"],["Amortization of intangible assets","9,381","","","5","","","9,509","","","5","","","(128)","","","(1)"],["Loss on sale of business","23,454","","","12","","","\u2014","","","\u2014","","","23,454","","","n/a"],["Total operating expenses","130,374","","","66","","","101,104","","","54","","","29,270","","","29"],["Income from operations","8,413","","","4","","","26,470","","","14","","","(18,057)","","","(68)"],["Other income, net","1,997","","","1","","","773","","","\u2014","","","1,224","","","158"],["Income before income taxes","10,410","","","5","","","27,243","","","15","","","(16,833)","","","(62)"],["Income tax expense","3,546","","","2","","","7,510","","","4","","","(3,964)","","","(53)"],["Net income","$","6,864","","","3","%","","$","19,733","","","11","%","","$","(12,869)","","","(65)","%"],["(1) Amounts in column may not foot due to rounding"]]
[[/GREPCENT_TABLE]]

Revenues - The increase in revenue period-over-period resulted from an increase in 1P recurring revenue customers that was driven primarily by business acquisitions and continued business growth in our core markets.

•ARPU increased 14% to approximately $15,100 for the three months ended June 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.

•The number of recurring revenue customers decreased 14% to approximately 46,650 at June 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business, which resulted in a decrease of approximately 8,200 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.

Recurring revenues increased 6% to $190.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Recurring revenues accounted for 96% of our total revenues for both the three months ended June 30, 2026 and 2025. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.

Cost of Revenues - The decrease in cost of revenues was primarily attributable to $1.7 million lower third-party personnel costs and $0.9 million lower software costs due to platform consolidation, partially offset by a $1.5 million increase in depreciation expense.

Sales and Marketing Expenses - The increase in sales and marketing expense was primarily attributable to a $1.2 million increase in third-party personnel costs, partially offset by a $0.7 million decrease in marketing spend.

Research and Development Expenses - The decrease in research and development expense was primarily driven by a $0.4 million decrease in depreciation expense resulting from lower capitalized research and development activities related to an acquired business.

General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $2.8 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of

[[GREPCENT_TABLE]]
[["SPS COMMERCE, INC.","23","Form 10-Q for the Quarterly Period ended June 30, 2026"]]
[[/GREPCENT_TABLE]]

Table of Contents

equity awards upon executive retirement. Personnel-related costs also increased by $2.2 million due to h

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1092699/000109269926000012/spsc-20251231.htm
Complete FY 2025 MD&A: /company/SPSC/mda/fy2025/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high
Filing date: 2026-02-19
Report date: 2025-12-31

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements and related notes which are included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Our actual results could differ materially from those anticipated in the forward-looking statements included in this discussion as a result of certain factors, including, but not limited to, those discussed in Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

Overview

SPS Commerce is a global supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations. Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.

Our network powers our portfolio of solutions that orchestrate the critical processes, protocols, and data exchanges needed to get the right product, in the right place, at the right time, every time. We have embedded deep expertise, proven processes, and compliance logic built from over 20 years of commerce intelligence into every connection, delivering a full-service experience that empowers partners to move forward faster, together.

We plan to continue 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, from time to time, developing new products and applications. We also intend to selectively pursue acquisitions that will add customers, allow us to expand into new regions, or allow us to offer new functionalities.

Key Financial Terms, Metrics and Non-GAAP Financial Measures

Sources of Revenues

Recurring Revenues

We primarily derive our revenues from subscription-based recurring revenue services, which are recognized on a ratable basis over the contract term. The following are our recurring revenue streams:

•Fulfillment - Our Fulfillment product offers a comprehensive solution designed to streamline supply chain operations. Our connections empower retailers, brands, distributors, manufacturers, and logistics providers to efficiently send and receive order data, ensuring accurate execution of required processes from order to invoicing and revenue recovery through fully automated operations. By integrating seamlessly with existing systems, Fulfillment enhances day-to-day efficiency, reduces errors, and provides real-time visibility across all of our customers' order channels.

•Analytics - Our Analytics product simplifies managing sell-through data from our customers’ business partners. We handle data acquisition, cleansing, normalization, and delivery. Our pre-built dashboards create custom reports, or integrate data with existing tools, to gain insights to enhance product performance, forecasting, pricing, and inventory management.

•Other Products - We also have other complementary products, including:

◦Assortment - Our Assortment product simplifies the communication of robust, accurate item data by automatically translating item attributes and hierarchies through a single connection across all sales channels.

◦Relationship Management - Our Relationship Management product (formerly known as Community) allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through proven change management, onboarding programs, and supplier score carding.

One-time Revenues

One-time revenues consist of set-up fees, which are recognized ratably, generally over two years, and miscellaneous fees from customers, primarily professional services and testing and certification. Miscellaneous fees are recognized at the time service is provided.

[[GREPCENT_TABLE]]
[["SPS COMMERCE, INC.","26","Form 10-K for the Annual Period ended December 31, 2025"]]
[[/GREPCENT_TABLE]]

Table of Contents

Cost of Revenues and Operating Expenses

Cost of Revenues - Cost of revenues consist primarily of personnel costs, stock-based compensation expense, and technology costs for our customer success and implementation teams, customer support personnel, and application support personnel, as well as amortization related to internally developed software.

Sales and Marketing Expenses - Sales and marketing expenses consist primarily of personnel costs and stock-based compensation expense for our sales, marketing, and product management teams, external marketing costs, and commissions earned by our sales personnel and referral partners.

Research and Development Expenses - Research and development expenses consist primarily of personnel costs, stock-based compensation expense, and technology costs for development of new and maintenance of existing products, net of amounts capitalized as developed software.

General and Administrative Expenses - General and administrative expenses consist primarily of personnel costs, stock-based compensation expense, and technology costs for finance, human resources, and internal security and technology support, as well as professional services and other fees, such as bad debt expense and credit card processing fees.

Overhead Allocation - We allocate overhead expenses such as rent, certain employee benefit costs, certain software costs, and depreciation of general office assets to cost of revenues and operating expenses categories based on expense type using department headcount or salary.

Amortization of Intangibles Assets - Amortization expense consists of the expense recognition of acquired intangible assets over their estimated useful lives.

Other Income, net

Other income, net consists primarily of investment income, in addition to realized gain (loss) from investments held and realized gain (loss) from foreign currency impacts on cash and investments.

Income Tax Expense

Income tax expense consists primarily of income taxes for U.S. federal jurisdiction in addition to income taxes for various state and international jurisdictions.

Metrics and Non-GAAP Financial Measures

Recurring Revenue - We define recurring revenue as active contracts during the reporting period under which the customer regularly pays us fees for subscription-based and reoccurring services. All components of the contracts that are not expected to recur (primarily set ups and professional services) are excluded from recurring revenue.

Recurring Revenue Customers - We define recurring revenue customers as customers with an active recurring revenue contract at the end of the period. A small portion of our recurring revenue customers consist of separate units within a larger organization and are separately invoiced. We treat each of these units, which may include divisions, departments, affiliates and franchises, as distinct recurring revenue customers. We classify the majority of our recurring revenue customers as '1P', with the exception of those recurring revenue customers that only have an online marketplace or e-Commerce connection within our network (which we refer to as '3P').

Annual Revenue Per User ("ARPU") - We calculate the annualized average recurring revenues per recurring revenue customer, which was previously referred to as “wallet share”, by dividing the annualized recurring revenues for the period by the average of the beginning and ending number of recurring revenue customers for the period.

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.

[[GREPCENT_TABLE]]
[["SPS COMMERCE, INC.","27","Form 10-K for the Annual Period ended December 31, 2025"]]
[[/GREPCENT_TABLE]]

Table of Contents

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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Critical Accounting Policies and Estimates

The discussion of our financial condition and results of operations is based upon our consolidated financial statements, which are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. On an ongoing basis, we evaluate our estimates, judgments, and assumptions. 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. Our actual results may differ from these estimates under different assumptions or conditions.

A critical accounting policy or estimate is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective, or complex judgments relating to 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, internally developed software, and business combinations are the most critical to fully understand and evaluate our financial condition and results of operations.

Revenue Recognition

Revenues are the amount that reflects the consideration we are contractually and legally entitled to, as well as the amount we expect to collect, in exchange for those services. Set-up fees, a component of our revenue, are specific for each connection a customer has with a trading partner. These nonrefundable fees are necessary for our customers to utilize our services and do not provide any standalone value. Many of our customers have connections with numerous trading partners.

Set-up fees constitute a material renewal option right that provide customers a significant future incentive that would not be otherwise available to that customer unless they entered into the contract, as the set-up fees will not be incurred again upon contract renewal. As such, set-up fees and related costs are deferred and recognized ratably, generally over two years, which is the estimated period for which a material right is present for our customers.

Internally Developed Software

In

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2025 MD&A: /company/SPSC/mda/fy2025/
All MD&A years: /company/SPSC/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2024 MD&A](/company/SPSC/mda/fy2024/): filed 2025-02-19; accession 0001092699-25-000011 (https://www.sec.gov/Archives/edgar/data/1092699/000109269925000011/spsc-20241231.htm)
- [FY 2023 MD&A](/company/SPSC/mda/fy2023/): filed 2024-02-21; accession 0001092699-24-000012 (https://www.sec.gov/Archives/edgar/data/1092699/000109269924000012/spsc-20231231.htm)
- [FY 2022 MD&A](/company/SPSC/mda/fy2022/): filed 2023-02-21; accession 0001092699-23-000006 (https://www.sec.gov/Archives/edgar/data/1092699/000109269923000006/spsc-20221231.htm)
- [FY 2021 MD&A](/company/SPSC/mda/fy2021/): filed 2022-02-22; accession 0001564590-22-005952 (https://www.sec.gov/Archives/edgar/data/1092699/000156459022005952/spsc-10k_20211231.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 7372 Services-Prepackaged Software) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity

Macro-to-micro threads including this sector: [US labor market](/thread/us-labor-market/), [Growth & output](/thread/growth-output/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/SPSC.md · JSON record: /company/SPSC.json · verified financials: /company/SPSC/financials.json / /company/SPSC/financials.csv · machine TOC for the whole site: /llms.txt