What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-07-25 compared with 2024-04-25 · 129 added, 66 removed, 445 unchanged (30% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares) March 31,

(in thousands, except shares) June 30,

2024 December 31,

50 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

SPS COMMERCE, INC.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) (unaudited) 2024 2023 2024 2023

16 unchanged sentences

Unrealized gain on investments, net of tax of $ 164 , $ 136 , $ 335 and $ 269 , respectively

491 408 1,004 806

Reclassification of gain on investments into earnings, net of tax of $( 238 ), $( 127 ), $( 454 ) and $( 252 ), respectively

10 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

SPS COMMERCE, INC.

2 unchanged sentences

Capital Retained

Earnings Accumulated Other Comprehensive Loss Total

Stockholders'

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

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

Stock-based compensation — — — — 12,237 — — 12,237

Shares issued pursuant to stock awards 78,387 — — — 2,636 — — 2,636

Employee stock purchase plan activity 35,676 — — — 3,895 — — 3,895

Net income — — — — — 14,682 — 14,682

Foreign currency translation adjustments — — — — — — 1,615 1,615

Unrealized gain on investments, net of tax — — — — — — 408 408

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 381 ) ( 381 )

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

Balances, March 31, 2024 37,049,001 $ 39 2,260,578 $ ( 148,892 ) $ 557,998 $ 277,048 $ ( 3,228 ) $ 682,965

Stock-based compensation — — — — 10,793 — — 10,793

Shares issued pursuant to stock awards 79,962 — — — 1,054 — — 1,054

Employee stock purchase plan activity 30,185 — — — 4,828 — — 4,828

Repurchases of common stock, net of costs ( 95,395 ) — 95,395 ( 17,483 ) — — — ( 17,483 )

Reissuances of treasury stock 22,874 — ( 22,874 ) 4,188 169 — — 4,357

Net income — — — — — 18,032 — 18,032

Foreign currency translation adjustments — — — — — — ( 901 ) ( 901 )

Unrealized gain on investments, net of tax — — — — — — 491 491

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 715 ) ( 715 )

Balances, June 30, 2024 37,086,627 $ 39 2,333,099 $ ( 162,187 ) $ 574,842 $ 295,080 $ ( 4,353 ) $ 703,421

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2024

Common Stock Treasury Stock Additional

Capital Retained

Earnings Accumulated Other Comprehensive Gain (Loss) Total

9 unchanged sentences

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 757 ) ( 757 )

Balances, March 31, 2023 36,532,756 $ 39 2,151,098 $ ( 128,892 ) $ 489,716 $ 208,510 $ ( 3,483 ) $ 565,890

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

Balances, December 31, 2023 36,820,048 $ 39 2,151,098 $ ( 128,892 ) $ 537,061 $ 259,045 $ 222 $ 667,475

3 unchanged sentences

Repurchases of common stock, net of costs ( 204,875 ) — 204,875 ( 37,483 ) — — — ( 37,483 )

Reissuances of treasury stock 22,874 — ( 22,874 ) 4,188 169 — — 4,357

Net income — — — — — 36,035 — 36,035

2 unchanged sentences

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 1,361 ) ( 1,361 )

Balances, March 31, 2024 37,049,001 $ 39 2,260,578 $ ( 148,892 ) $ 557,998 $ 277,048 $ ( 3,228 ) $ 682,965

Balances, June 30, 2024 37,086,627 $ 39 2,333,099 $ ( 162,187 ) $ 574,842 $ 295,080 $ ( 4,353 ) $ 703,421

See accompanying notes to these condensed consolidated financial statements.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

SPS COMMERCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(in thousands) (unaudited) 2024 2023

8 unchanged sentences

Other, net ( 907 ) 1,143

Changes in assets and liabilities

Changes in assets and liabilities, net of effects of acquisitions

Accounts receivable ( 11,407 ) ( 9,937 )

11 unchanged sentences

Maturities of investments 105,000 60,000

Acquisition of businesses, net ( 29,343 ) —

Net cash used in investing activities ( 11,929 ) ( 18,348 )

10 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

SPS COMMERCE, INC.

19 unchanged sentences

Significant Accounting Policies

There were no material changes in our significant accounting policies during the three months ended March 31, 2024 .

There were no material changes in our significant accounting policies during the six months ended June 30, 2024 .

See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 , as filed with the SEC, for additional information regarding our significant accounting policies.

8 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

NOTE B – Business Acquisitions

Traverse Systems

Effective May 8, 2024, we entered into an asset purchase agreement to acquire certain assets of Traverse Systems LLC ("Traverse Systems"), an industry-leading provider in retailer supply chain performance and vendor management.

Total consideration transferred at close was $ 29.4 million, subject to customary post-close adjustments, which was comprised of $ 25.0 million paid in cash and 22,874 shares of SPS common stock (valued at $ 4.4 million, determined based on the opening price of SPS common stock at acquisition date).

The shares were issued from SPS treasury shares, see Note J - Stockholders' Equity for further detail on the treasury share reissuance.

We accounted for the acquisition as a business combination.

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.

Assets acquired primarily comprised of subscriber relationships and developed technology intangible assets, totaling $ 7.7 million and $ 3.6 million of estimated fair value, respectively, and $ 18.4 million was allocated to goodwill based on preliminary measurement.

The remainder of the consideration transferred was allocated to net assets acquired other than the intangible assets.

The purchase accounting for the acquisition has not been finalized as of June 30, 2024;

provisional amounts are primarily related to intangible assets.

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

The goodwill associated with the acquisition is deductible for income tax purposes.

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

1 unchanged sentence

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 March 31, 2024;

provisional amounts are primarily related to tax components.

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

The purchase accounting for the acquisition was finalized as of June 30, 2024.

The goodwill associated with the acquisition is not deductible for income tax purposes.

Purchase Price Allocation

1 unchanged sentence

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 date:

(in thousands) Acquisition Date Estimated Fair Value as of

September 30, 2023 Adjustment Acquisition Date Estimated Fair Value as of

March 31, 2024

The following table presents the purchase consideration and fair values of acquired assets and liabilities recorded in the Company's condensed consolidated balance sheet as of the acquisition date:

(in thousands)

Cash paid $ 73,558

Estimated fair value of assets and liabilities acquired:

Cash $ 4,859 $ — $ 4,859

Accounts receivable 1,311

8 unchanged sentences

Goodwill $ 46,420

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2024

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

3 unchanged sentences

Other Acquisition Activity

On April 10, 2024, the Company entered into an Asset Purchase Agreement (the "Agreement") to acquire Vision33's SAP Business One SPS Integration Technology.

Pursuant to the Agreement, the purchase price, denominated in Canadian dollars ("CAD"), was $ 5.8 million CAD ($ 4.3 million U.S.

Effective April 10, 2024, the Company entered into an asset purchase agreement to acquire Vision33's SAP Business One SPS Integration Technology.

Pursuant to the definitive agreement, the purchase price, denominated in Canadian dollars ("CAD"), was $ 5.8 million CAD ($ 4.3 million U.S.

dollars ["USD"] at the Agreement date exchange rate), of which $ 4.5 million CAD ($ 3.3 million USD) was paid in cash at close, with the remainder payable in cash within two years , subject to certain closing conditions.

Given the timing of the acquisition, the Company is currently in the process of determining the impact on its financial statements.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Assets acquired were primarily comprised of developed technology and subscriber relationships, totaling $ 1.7 million USD and $ 0.4 million USD of estimated fair value, respectively.

The remainder of the consideration transferred, $ 2.2 million USD, was allocated to goodwill.

The goodwill associated with the acquisition is deductible for income tax purposes.

NOTE C – Revenue

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Domestic revenue 83 % 84 % 83 % 84 %

7 unchanged sentences

Given that the recurring revenue contracts are for one year or less, we have applied the optional exemption to not disclose information about the remaining performance obligations for recurring revenue contracts.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2024

One-time Revenues

7 unchanged sentences

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

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

3 unchanged sentences

Balance, end of period $ 84,928 $ 75,255 $ 84,928 $ 75,255

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2024

NOTE E – Fair Value Measurements

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

March 31, 2024 December 31, 2023

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

June 30, 2024 December 31, 2023

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

(in thousands)

Cash equivalents:

Money market funds Level 1 $ 169,948 $ — $ 169,948 $ 161,233 $ — $ 161,233

Certificates of deposit Level 1 6,523 — 6,523 6,805 — 6,805

Money market funds Level 1 $ 187,559 $ — $ 187,559 Level 1 $ 161,233 $ — $ 161,233

Certificates of deposit Level 2 6,666 — 6,666 Level 1 6,805 — 6,805

Marketable securities:

Commercial paper Level 2 49,133 518 49,651 48,860 694 49,554

Commercial paper Level 2 24,669 219 24,888 Level 2 48,860 694 49,554

$ 218,894 $ 219 $ 219,113 $ 216,898 $ 694 $ 217,592

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

NOTE F – Allowance for Credit Losses

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

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

5 unchanged sentences

Property and equipment, net consisted of the following:

(in thousands) March 31,

2024 December 31, 2023

(in thousands) June 30, 2024 December 31, 2023

Internally developed software $ 64,731 $ 60,396

7 unchanged sentences

was as follows:

2024 December 31, 2023

June 30, 2024 December 31, 2023

International property and equipment 17 % 15 %

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

NOTE H – Goodwill and Intangible Assets, Net

The activity in goodwill was as follows:

Three Months Ended

(in thousands) 2024

(in thousands) Six Months Ended

June 30, 2024

Balance, beginning of period $ 249,176

Addition from business acquisitions 20,564

Foreign currency translation ( 2,685 )

3 unchanged sentences

Intangible assets, net consisted of the following:

March 31, 2024

June 30, 2024

($ in thousands) Gross

19 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

NOTE I – Commitments and Contingencies

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

3 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended

Six Months Ended

(in thousands) 2024 2023

1 unchanged sentence

Operating cash flows from operating leases $ 2,423 $ 1,329

Right-of-use assets obtained in exchange for operating lease liabilities 533 268

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

2024 December 31, 2023

June 30, 2024 December 31, 2023

Weighted-average remaining lease term 2.8 years 3.1 years

Weighted-average discount rate 4.1 % 4.0 %

At March 31, 2024, our future minimum payments under operating leases were as follows:

At June 30, 2024, our future minimum payments under operating leases were as follows:

(in thousands)

6 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 March 31, 2024, our remaining purchase commitments and estimated purchase timing were as follows:

At June 30, 2024, our remaining purchase commitments and estimated purchase timing were as follows:

(in thousands)

2 unchanged sentences

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

NOTE J – Stockholders’ Equity

Share Repurchase Program

Share Repurchase Programs

Our board of directors has authorized a program to repurchase our common stock.

Details of the program and activity thereunder through March 31, 2024 were as follows:

Details of the program and activity thereunder through June 30, 2024 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

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except shares and per share amounts) 2024 2023 2024 2023

2 unchanged sentences

Average total cost per repurchased share $ 183.27 $ — $ 182.96 $ —

On July 24, 2024 (announced July 25, 2024), our board of directors authorized a program to repurchase up to $ 100.0 million of our common stock, excluding costs to obtain.

Under the program, purchases may be made from time to time in the open market or in privately negotiated purchases, or both.

The share repurchase program will become effective August 23, 2024 and expires on July 24, 2026.

Treasury Stock Reissuance

In connection with the acquisition of Traverse Systems, the Company re-issued treasury shares as part of the purchase consideration (see Note B – Business Combinations for further information).

Treasury stock reissuances are accounted for using the specific identification method, with gains (or losses to the extent of previously recognized gains) recognized in additional paid-in capital and any remaining loss recorded in retained earnings.

NOTE K – Stock-Based Compensation

6 unchanged sentences

if they have given their notice and completed the notice period, expense is recognized upon grant.

At March 31, 2024, there were 12.3 million shares available for grant under approved equity compensation plans.

At June 30, 2024, there were 12.3 million shares available for grant under approved equity compensation plans.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2024

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

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

$ 11,494 $ 12,881 $ 31,512 $ 24,661

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

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

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

2 unchanged sentences

RSUs & DSUs 6,952 7,381 22,443 13,443

RSAs 89 115 215 223

ESPP 802 748 1,523 1,337

401(k) stock match 700 644 1,438 1,249

$ 11,494 $ 12,881 $ 31,512 $ 24,661

As of March 31, 2024, there was $ 83.7 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 2.8 years.

As of June 30, 2024, there was $ 74.8 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 2.6 years.

Stock Options

Our stock option activity was as follows:

Three Months Ended

March 31, 2024

Six Months Ended

June 30, 2024

Options (#) Weighted Average

5 unchanged sentences

Outstanding, end of period 331,592 $ 96.43

Of the total outstanding options at March 31, 2024, 0.3 million were exercisable.

Of the total outstanding options at June 30, 2024, 0.3 million were exercisable.

The outstanding and exercisable options had a weighted average exercise price of $ 77.15 per share and a weighted average remaining contractual life of 3.0 years.

The weighted average grant date fair value of options granted during the three months ended March 31, 2024 was $ 67.30 per share.

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2024

The weighted average grant date fair value of options granted during the six months ended June 30, 2024 was $ 69.86 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, 2024, PSU awards granted in 2021 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 March 31, 2024

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

Three Months Ended

March 31, 2024

Six Months Ended

June 30, 2024

# Weighted Average Grant

5 unchanged sentences

Outstanding, end of period 728,064 $ 173.50

The number of PSUs, RSUs, RSAs, and DSUs outstanding at March 31, 2024 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 June 30, 2024 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.

Employee Stock Purchase Plan

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands, except shares) 2024 2023 2024 2023

1 unchanged sentence

Shares purchased 30,185 35,676 32,583 38,225

A total of 1.7 million shares of common stock are reserved for issuance under the plan at March 31, 2024.

A total of 1.6 million shares of common stock are reserved for issuance under the plan at June 30, 2024.

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:

3 unchanged sentences

Risk-free interest rate 5.3 %

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended June 30, 2024

NOTE L – Income Taxes

3 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 March 31, 2024

NOTE M – Other Income and Expense

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2024 2023 2024 2023

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

1 unchanged sentence

SPS COMMERCE, INC.

Form 10-Q for the Quarterly Period ended March 31, 2024

Form 10-Q for the Quarterly Period ended June 30, 2024

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