What changed in this filing

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Item 1. Financial Statements

2023-10-26 compared with 2023-07-27 · 138 added, 88 removed, 448 unchanged (34% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares) June 30,

(in thousands, except shares) September 30,

2023 December 31,

49 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Form 10-Q for the Quarterly Period ended September 30, 2023

SPS COMMERCE, INC.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) (unaudited) 2023 2022 2023 2022

15 unchanged sentences

Foreign currency translation adjustments ( 2,966 ) ( 2,296 ) ( 1,446 ) ( 3,309 )

Unrealized gain (loss) on investments, net of tax of $ 136 , $( 3 ), $ 269 and $( 4 ), respectively

Unrealized gain on investments, net of tax of $ 190 , $ 53 , $ 459 and $ 49 , respectively

570 158 1,376 147

1 unchanged sentence

( 412 ) ( 39 ) ( 1,169 ) ( 51 )

Total other comprehensive income (expense) 1,642 ( 1,774 ) 1,569 ( 1,036 )

Total other comprehensive expense ( 2,808 ) ( 2,177 ) ( 1,239 ) ( 3,213 )

Comprehensive income $ 14,034 $ 13,686 $ 45,574 $ 36,006

7 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Form 10-Q for the Quarterly Period ended September 30, 2023

SPS COMMERCE, INC.

6 unchanged sentences

(in thousands, except shares) (unaudited) Shares Amount Shares Amount

Balances, March 31, 2022 36,120,518 $ 38 1,910,897 $ ( 100,903 ) $ 442,405 $ 150,690 $ ( 709 ) $ 491,521

Balances, June 30, 2022 36,029,477 $ 38 2,044,549 $ ( 115,900 ) $ 453,922 $ 161,443 $ ( 2,483 ) $ 497,020

Stock-based compensation — — — — 7,429 — — 7,429

4 unchanged sentences

Foreign currency translation adjustments — — — — — — ( 2,296 ) ( 2,296 )

Unrealized loss on investments, net of tax — — — — — — ( 8 ) ( 8 )

Reclassification of loss on investments into earnings, net of tax — — — — — — ( 23 ) ( 23 )

Unrealized gain on investments, net of tax — — — — — — 158 158

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 39 ) ( 39 )

Balances, September 30, 2022 36,037,964 $ 38 2,146,783 $ ( 128,377 ) $ 463,356 $ 177,306 $ ( 4,660 ) $ 507,663

Balances, June 30, 2023 36,646,819 $ 39 2,151,098 $ ( 128,892 ) $ 508,484 $ 223,192 $ ( 1,842 ) $ 600,981

Balances, March 31, 2023 36,532,756 $ 39 2,151,098 $ ( 128,892 ) $ 489,716 $ 208,510 $ ( 3,484 ) $ 565,889

Stock-based compensation — — — — 10,780 — — 10,780

5 unchanged sentences

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 412 ) ( 412 )

Balances, June 30, 2023 36,646,819 $ 39 2,151,098 $ ( 128,892 ) $ 508,484 $ 223,192 $ ( 1,842 ) $ 600,981

Balances, September 30, 2023 36,695,930 $ 39 2,151,098 $ ( 128,892 ) $ 520,313 $ 240,034 $ ( 4,650 ) $ 626,844

Common Stock Treasury Stock Additional

10 unchanged sentences

Foreign currency translation adjustments — — — — — — ( 3,309 ) ( 3,309 )

Unrealized loss on investments, net of tax — — — — — — ( 11 ) ( 11 )

Reclassification of loss on investments into earnings, net of tax — — — — — — ( 12 ) ( 12 )

Balances, June 30, 2022 36,029,477 $ 38 2,044,549 $ ( 115,900 ) $ 453,922 $ 161,443 $ ( 2,483 ) $ 497,020

Unrealized gain on investments, net of tax — — — — — — 147 147

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 51 ) ( 51 )

Balances, September 30, 2022 36,037,964 $ 38 2,146,783 $ ( 128,377 ) $ 463,356 $ 177,306 $ ( 4,660 ) $ 507,663

Balances, December 31, 2022 36,158,046 $ 38 2,151,098 $ ( 128,892 ) $ 476,117 $ 193,221 $ ( 3,411 ) $ 537,073

6 unchanged sentences

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 1,169 ) ( 1,169 )

Balances, June 30, 2023 36,646,819 $ 39 2,151,098 $ ( 128,892 ) $ 508,484 $ 223,192 $ ( 1,842 ) $ 600,981

Balances, September 30, 2023 36,695,930 $ 39 2,151,098 $ ( 128,892 ) $ 520,313 $ 240,034 $ ( 4,650 ) $ 626,844

See accompanying notes to these condensed consolidated financial statements.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Form 10-Q for the Quarterly Period ended September 30, 2023

SPS COMMERCE, INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in thousands) (unaudited) 2023 2022

22 unchanged sentences

Maturities of investments 95,000 132,500

Acquisition of business, net ( 70,218 ) ( 44,923 )

Net cash used in investing activities ( 93,448 ) ( 60,593 )

5 unchanged sentences

Effect of foreign currency exchange rate changes ( 260 ) ( 557 )

Net increase in cash and cash equivalents 46,371 5,173

Net increase (decrease) in cash and cash equivalents 15,809 ( 21,322 )

Cash and cash equivalents at beginning of period 162,893 207,552

2 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Form 10-Q for the Quarterly Period ended September 30, 2023

SPS COMMERCE, INC.

20 unchanged sentences

Significant Accounting Policies

There were no material changes in our significant accounting policies during the six months ended June 30, 2023.

There were no material changes in our significant accounting policies during the nine months ended September 30, 2023.

See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 , as filed with the SEC, for additional information regarding our significant accounting policies.

3 unchanged sentences

October 2021 This amendment requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, effective for all business combinations in the year of adoption and thereafter.

January 2023 The adoption of this standard may have a material impact on the purchase accounting for future business combinations depending on the specific amount of contract assets and liabilities being acquired.

January 2023 The adoption of this standard has not had a material impact on the purchase accounting for business combinations.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Form 10-Q for the Quarterly Period ended September 30, 2023

NOTE B – Business Acquisitions

Effective July 19, 2022, we acquired all of the outstanding equity ownership interests of GCommerce, Inc.

("GCommerce"), a leading EDI provider within the automotive aftermarket industry.

Pursuant to the definitive agreement, the purchase price was $ 45.1 million, including post-closing adjustments.

During the quarter ended March 31, 2023, provisional amounts were adjusted by $ 1.6 million, primarily relating to a $ 1.5 million decrease in the estimated value of deferred income tax assets, with the corresponding offset to goodwill.

During the quarter ending June 30, 2023, there were no significant adjustments made to provisional amounts.

The purchase accounting for the acquisition has been finalized as of June 30, 2023.

Effective October 4, 2022, we acquired all of the outstanding equity ownership interests of Canadian based InterTrade Systems Inc.

1 unchanged sentence

Pursuant to the definitive agreement, the purchase price was $ 49.1 million, including estimated post-closing adjustments.

The purchase accounting for the acquisition has not been finalized as of June 30, 2023 due to various items including valuation modeling completion;

provisional amounts are primarily related to intangible assets.

We expect to finalize the allocation of the purchase price within the one-year measurement period following the acquisition.

During the quarter ended June 30, 2023, provisional amounts were adjusted by $ 3.1 million, primarily relating to a $ 3.9 million decrease in estimated value of intangible assets and the corresponding $ 1.0 million change to the deferred tax position, with the offsets to goodwill.

On July 26, 2023, we entered into a purchase agreement with TIE Kinetix N.V.

("TIE Kinetix"), a leading provider of supply chain digitalization including EDI and e-invoicing in Europe, to acquire the business and operations of TIE Kinetix by purchasing the equity of its wholly owned operating subsidiary.

The purchase price is € 64.5 million ($ 71.4 million at the July 26, 2023 exchange rate), net of cash acquired.

The transaction is subject to customary closing conditions and is expected to close during the quarter ending September 30, 2023, upon the approval of the shareholders of TIE Kinetix.

During the quarter ended September 30, 2023, there were no significant adjustments made to provisional amounts.

The purchase accounting has been finalized as of September 30, 2023.

Effective September 13, 2023, we acquired all of the outstanding equity ownership interests of TIE Kinetix Holding B.V.

("TIE Kinetix"), a leading provider of supply chain digitalization including EDI and e-invoicing in Europe.

Pursuant to the definitive agreement, the purchase price was € 63.9 million ($ 68.7 million at the September 13, 2023 exchange rate), net of cash acquired.

The purchase accounting for the acquisition has not been finalized as of September 30, 2023;

provisional amounts are primarily related to intangible assets and tax components.

We expect to finalize the allocation of the purchase price within the one-year measurement period following the acquisition.

Purchase Price Allocations

We accounted for the acquisitions as business combinations.

We allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates:

InterTrade TIE Kinetix

(in thousands) Acquisition Date Estimated Fair Value as of

December 31, 2022 Adjustment Acquisition Date Estimated Fair Value as of

September 30, 2023 Acquisition Date Estimated Fair Value as of

September 30, 2023

Cash paid at transaction date $ 47,165 $ — $ 47,165 $ 73,558

Contingent consideration 2,000 — 2,000

Post-closing adjustments ( 93 ) 116 23

Total consideration $ 49,072 $ 116 $ 49,188 $ 73,558

Estimated fair value of assets and liabilities acquired:

Cash $ 668 $ — $ 668 $ 4,859

Accounts receivable 1,302 (94) 1,208 1,347

Other assets 1,903 — 1,903 2,981

Intangible assets

Subscriber relationships 17,640 ( 3,960 ) 13,680 18,183

Developed technology 4,410 ( 501 ) 3,909 12,122

Current liabilities ( 2,337 ) ( 35 ) ( 2,372 ) ( 3,606 )

Deferred revenue ( 397 ) 202 ( 195 ) ( 6,421 )

Deferred income tax liabilities, net ( 6,127 ) 1,030 ( 5,097 ) ( 6,112 )

Total fair value of assets and liabilities acquired $ 17,062 $ ( 3,358 ) $ 13,704 $ 23,354

Goodwill $ 32,010 $ 3,475 $ 35,485 $ 50,205

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

The following table summarizes the estimated useful lives for each acquired intangible asset:

Estimated Useful Life

InterTrade TIE Kinetix

Subscriber relationships 8.0 years 8.0 years

Developed technology 6.0 years 6.0 years

Other Acquisition Activity

During the third quarter of 2023, the Company had other acquisition activity resulting in a total purchase price of $ 1.5 million, paid in cash.

Assets acquired were primarily comprised of developed technology and customer relationships, totaling $ 0.9 million of estimated fair value.

The remainder of the consideration transferred, $ 0.6 million, was allocated to goodwill.

NOTE C – Revenue

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

7 unchanged sentences

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.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Recurring Revenues

12 unchanged sentences

As such, set-up fees and related costs are deferred and recognized ratably over two years which is the estimated period for which a material right is present for our customers.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

The table below presents the activity of the portion of the deferred revenue liability relating to set-up fees:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

3 unchanged sentences

Balance, end of period $ 79,046 $ 66,556 $ 79,046 $ 66,556

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

NOTE E – Fair Value Measurements

1 unchanged sentence

Cash equivalents and investments, as measured at fair value on a recurring basis, consisted of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Fair Value Level Amortized Cost Unrealized Gains (Losses), net Fair Value Amortized Cost Unrealized Gains (Losses), net Fair Value

5 unchanged sentences

Commercial paper Level 2 53,546 651 54,197 44,224 375 44,599

treasury securities Level 2 9,827 135 9,962 — — —

$ 180,077 $ 651 $ 180,728 $ 124,405 $ 375 $ 124,780

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

NOTE F – Allowance for Credit Losses

The allowance for credit losses activity, included in accounts receivable, net, was as follows:

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2023 2022

5 unchanged sentences

Property and equipment, net consisted of the following:

(in thousands) June 30,

(in thousands) September 30,

2023 December 31, 2022

6 unchanged sentences

Total property and equipment, net $ 36,209 $ 35,458

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

NOTE H – Goodwill and Intangible Assets, Net

The activity in goodwill was as follows:

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2023

1 unchanged sentence

Foreign currency translation ( 1,162 )

Addition from business acquisition(s) 50,842

Remeasurement from provisional purchase accounting amount 5,081

2 unchanged sentences

Intangible assets, net consisted of the following:

June 30, 2023

September 30, 2023

($ in thousands) Gross

5 unchanged sentences

$ 151,239 $ ( 42,766 ) $ ( 4,876 ) $ 103,597 6.1 years

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

December 31, 2022

11 unchanged sentences

Total future amortization $ 103,597

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

NOTE I – Commitments and Contingencies

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

3 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2023 2022

3 unchanged sentences

Supplemental balance sheet information related to operating leases was as follows:

September 30,

2023 December 31, 2022

1 unchanged sentence

Weighted-average discount rate 3.7 % 4.0 %

At June 30, 2023, our future minimum payments under operating leases were as follows:

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

At September 30, 2023, our future minimum payments under operating leases were as follows:

(in thousands)

Remainder of 2023 $ 767

Thereafter 97

Total future gross payments $ 16,107

3 unchanged sentences

We have entered into separate noncancelable agreements with computing infrastructure, productivity software, customer relationship management, and performance and security data analytics vendors for services through 2026.

At June 30, 2023, our remaining purchase commitments and estimated purchase timing were as follows:

At September 30, 2023, our remaining purchase commitments and estimated purchase timing were as follows:

(in thousands)

1 unchanged sentence

Total estimated future purchases $ 29,098

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

NOTE J – Stockholders’ Equity

1 unchanged sentence

Our board of directors has authorized multiple non-concurrent programs to repurchase our common stock.

Details of the programs and activity thereunder through June 30, 2023 were as follows:

Details of the programs and activity thereunder through September 30, 2023 were as follows:

(in thousands) Effective Date Expiration Date Share Value Authorized for Repurchase Share Value Repurchased Unused & Expired Share Repurchase Value Share Value Available for Future Repurchase

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except shares and per share amounts) 2023 2022 2023 2022

2 unchanged sentences

Average price per repurchased share $ — $ 122.04 $ — $ 119.46

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

NOTE K – Stock-Based Compensation

3 unchanged sentences

This cost is recognized over the period for which the employee is required to provide service in exchange for the award or the award performance period, except for expenses relating to retirement-eligible employees that have not given their required notice, which is recognized on a pro-rata basis over the notice period prior to retirement.

At June 30, 2023 , there were 12.8 million shares available for grant under approved equity compensation plans.

At September 30, 2023 , there were 12.8 million shares available for grant under approved equity compensation plans.

Stock-based compensation expense was allocated in the condensed consolidated statements of comprehensive income as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

5 unchanged sentences

$ 11,436 $ 7,960 $ 36,097 $ 25,636

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Stock-based compensation expense by grant type or plan was as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

PSUs 2,812 1,541 10,236 6,244

RSUs 7,381 5,094 13,443 9,732

RSAs & DSUs 115 110 223 218

RSUs & DSUs 6,722 4,735 20,165 14,467

RSAs 122 110 345 328

ESPP 637 577 1,974 1,609

1 unchanged sentence

$ 11,436 $ 7,960 $ 36,097 $ 25,636

As of June 30, 2023, there was $ 53.8 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a primarily straight-line basis over a weighted average period of 2.5 years.

As of September 30, 2023, there was $ 50.3 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a primarily straight-line basis over a weighted average period of 2.4 years.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

Stock Options

Our stock option activity was as follows:

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

Options (#) Weighted Average

5 unchanged sentences

Outstanding, end of period 446,131 $ 71.54

Of the total outstanding options at June 30, 2023, 0.4 million were exercisable.

Of the total outstanding options at September 30, 2023, 0.4 million were exercisable.

The outstanding and exercisable options had a weighted average exercise price of $ 59.61 per share and a weighted average remaining contractual life of 2.9 years.

The weighted average grant date fair value of options granted during the six months ended June 30, 2023 was $ 56.23 per share.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2023 was $ 56.29 per share.

This was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

8 unchanged sentences

In the three months ended March 31, 2023 , PSU awards granted in 2020 vested at the maximum performance level and 0.1 million shares of common stock were issued.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Activity for our PSUs, RSUs, RSAs, and DSUs in aggregate was as follows:

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

# Weighted Average Grant

5 unchanged sentences

Outstanding, end of period 715,438 $ 145.83

The number of PSUs, RSUs, RSAs, and DSUs outstanding at June 30, 2023 included less than 0.1 million units that have vested, but the shares of common stock have not yet been issued, pursuant to the terms of the underlying agreements.

The number of PSUs, RSUs, RSAs, and DSUs outstanding at September 30, 2023 included 0.1 million units that have vested, but the shares of common stock have not yet been issued, pursuant to the terms of the underlying agreements.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

Employee Stock Purchase Plan

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except shares) 2023 2022 2023 2022

1 unchanged sentence

Shares purchased 3,159 2,481 41,384 37,516

A total of 1.7 million shares of common stock are reserved for issuance under the ESPP as of June 30, 2023.

A total of 1.7 million shares of common stock are reserved for issuance under the ESPP as of September 30, 2023.

The fair value was estimated based on the market price of our common stock at the beginning of the offering period using the following assumptions:

8 unchanged sentences

Additionally, excess tax benefits generated upon settlement or exercise of stock awards are recognized as a reduction to income tax expense as a discrete tax item in the quarter that the event occurs, creating potentially significant fluctuation in tax expense by quarter and by year.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

NOTE M – Other Income and Expense

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

3 unchanged sentences

Total other income (expense), net $ 1,702 $ ( 695 ) $ 4,859 $ ( 1,610 )

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended September 30, 2023

NOTE N – Net Income Per Share

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) 2023 2022 2023 2022

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

Anti-dilutive shares 40 107 43 222

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

NOTE O – Geographic Information

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

was as follows:

September 30,

2023 December 31, 2022

1 unchanged sentence

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2023

Form 10-Q for the Quarterly Period ended September 30, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements