What changed in this filing

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Item 1. Financial Statements

2024-10-24 compared with 2024-07-25 · 110 added, 89 removed, 485 unchanged (29% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares) June 30,

(in thousands, except shares) September 30,

2024 December 31,

50 unchanged sentences

SPS COMMERCE, INC.

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

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

SPS COMMERCE, INC.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

29 unchanged sentences

SPS COMMERCE, INC.

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

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

SPS COMMERCE, INC.

5 unchanged sentences

(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

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

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

5 unchanged sentences

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

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

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

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

Stock-based compensation — — — — 9,996 — — 9,996

7 unchanged sentences

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 248 ) ( 248 )

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

Balances, September 30, 2024 37,566,443 $ 39 1,928,968 $ ( 99,748 ) $ 611,719 $ 318,540 $ ( 1,185 ) $ 829,365

SPS COMMERCE, INC.

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

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

Common Stock Treasury Stock Additional

11 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

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

8 unchanged sentences

Reclassification of gain on investments into earnings, net of tax — — — — — — ( 1,610 ) ( 1,610 )

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

Balances, September 30, 2024 37,566,443 $ 39 1,928,968 $ ( 99,748 ) $ 611,719 $ 318,540 $ ( 1,185 ) $ 829,365

See accompanying notes to these condensed consolidated financial statements.

SPS COMMERCE, INC.

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

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

SPS COMMERCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(in thousands) (unaudited) 2024 2023

30 unchanged sentences

Effect of foreign currency exchange rate changes 849 ( 260 )

Net increase in cash and cash equivalents 21,151 46,371

Net increase (decrease) in cash and cash equivalents ( 20,239 ) 15,809

Cash and cash equivalents at beginning of period 219,081 162,893

2 unchanged sentences

SPS COMMERCE, INC.

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

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

SPS COMMERCE, INC.

19 unchanged sentences

Significant Accounting Policies

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

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

Form 10-Q for the Quarterly Period ended September 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).

SupplyPike, Inc.

Effective July 31, 2024, we acquired SupplyPike, Inc.

("SupplyPike"), an automated invoice deduction management and prevention solution, through the purchase of all of the outstanding equity ownership interests of SupplyPike.

Pursuant to the definitive agreement and plan of merger, the total consideration transferred at close was $ 205.8 million, net of cash acquired and subject to customary post-close adjustments.

The consideration was comprised of $ 118.6 million paid in cash and 404,587 shares of SPS common stock (valued at $ 87.2 million, determined at acquisition close based on the price of SPS common stock).

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.

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

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

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.

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

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 was finalized as of June 30, 2024.

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

2 unchanged sentences

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 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:

The following table presents the purchase consideration and estimated 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 $ 124,769

Equity consideration 87,156

Total consideration $ 211,925

Estimated fair value of assets and liabilities acquired:

Accounts receivable 1,311

Other assets 3,659

2 unchanged sentences

Developed technology 49,500

Current liabilities ( 3,838 )

Deferred revenue ( 2,297 )

Other liabilities ( 2,643 )

Deferred income tax liabilities, net ( 11,580 )

1 unchanged sentence

Goodwill $ 152,668

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:

Estimated Useful Life

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

Subscriber relationships 7.0 years

Developed technology 8.0 years

Traverse Systems

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 at acquisition close based o n the price of S PS common stock).

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

SPS COMMERCE, INC.

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

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.

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

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

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

Other Acquisition Activity

4 unchanged sentences

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

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

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

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

8 unchanged sentences

Revenue by Geographic Area

Domestic revenue, which we define as revenue that was attributable to customers based within the U.S., was as follows:

Domestic revenue, which we define as revenue that was attributable to customers based within the United States ("U.S."), was as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

Timing of billings varies by customer and by contract type and generally are either in advance or within 30 days of the service being performed.

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

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

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

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.

We expect to recognize $ 13.5 million of the balance as of September 30, 2024 as revenue over the next 12 months with the remaining amount recognized thereafter.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

7 unchanged sentences

We have applied the optional exemption to not disclose information about the remaining performance obligations for miscellaneous one-time fee contracts since they have original durations of one year or less.

Deferred Revenue

We recognized revenue of $ 61.8 million and $ 52.4 million in the nine months ended September 30, 2024 and 2023, respectively, from amounts included in deferred revenue at the beginning of the period.

NOTE D – Deferred Costs

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

4 unchanged sentences

SPS COMMERCE, INC.

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

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

NOTE E – Fair Value Measurements

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

June 30, 2024 December 31, 2023

September 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

8 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023

5 unchanged sentences

Property and equipment, net consisted of the following:

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

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

Internally developed software $ 69,727 $ 60,396

7 unchanged sentences

was as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

International property and equipment 18 % 15 %

SPS COMMERCE, INC.

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

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

NOTE H – Goodwill and Intangible Assets, Net

The activity in goodwill was as follows:

(in thousands) Six Months Ended

June 30, 2024

(in thousands) Nine Months Ended

September 30, 2024

Balance, beginning of period $ 249,176

5 unchanged sentences

Intangible assets, net consisted of the following:

June 30, 2024

September 30, 2024

($ in thousands) Gross

19 unchanged sentences

SPS COMMERCE, INC.

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

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

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) 2024 2023 2024 2023

3 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Six Months Ended

Nine Months Ended

September 30,

(in thousands) 2024 2023

Cash paid for amounts included in the measurement of lease liabilities

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

Operating cash outflows from operating leases $ 3,801 $ 3,835

Right-of-use assets obtained in exchange for operating lease liabilities 2,554 1,072

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Weighted-average remaining lease term 2.6 years 3.1 years

Weighted-average discount rate 4.2 % 4.0 %

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

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

At September 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 June 30, 2024

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

NOTE J – Stockholders’ Equity

Share Repurchase Programs

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

Details of the program and activity thereunder through June 30, 2024 were as follows:

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

Details of the programs and activity thereunder through September 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

2022 Program August 2022 July 2024 $ 50,000 $ 40,556 $ 9,444 N/A

2024 Program August 2024 July 2026 100,000 — N/A $ 100,000

Share repurchases are accounted for as the trade date occurs and are reflected in the condensed consolidated financial statements net of the costs incurred to acquire the shares.

2 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) 2024 2023 2024 2023

2 unchanged sentences

Average total cost per repurchased share $ 184.21 $ — $ 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).

In connection with the acquisitions of SupplyPike and Traverse Systems, the Company re-issued treasury shares as part of the purchase considerations (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.

7 unchanged sentences

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

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

At September 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

Form 10-Q for the Quarterly Period ended September 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

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

6 unchanged sentences

$ 10,752 $ 11,436 $ 42,264 $ 36,097

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.

As of September 30, 2024, there was $ 78.9 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.

Stock Options

Our stock option activity was as follows:

Six Months Ended

June 30, 2024

Nine Months Ended

September 30, 2024

Options (#) Weighted Average

5 unchanged sentences

Outstanding, end of period 296,357 $ 103.01

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

Of the total outstanding options at September 30, 2024, 0.2 million were exercisable.

The outstanding and exercisable options had a weighted average exercise price of $ 83.65 per share and a weighted average remaining contractual life of 3.0 years.

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.

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

The weighted average grant date fair value of options granted during the nine months ended September 30, 2024 was $ 69.82 per share.

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

9 unchanged sentences

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

Six Months Ended

June 30, 2024

Nine Months Ended

September 30, 2024

# Weighted Average Grant

5 unchanged sentences

Outstanding, end of period 746,241 $ 179.54

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.

The number of PSUs, RSUs, RSAs, and DSUs outstanding at September 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

September 30, Nine Months Ended

September 30,

(in thousands, except shares) 2024 2023 2024 2023

1 unchanged sentence

Shares purchased 2,833 3,159 35,416 41,384

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

A total of 1.6 million shares of common stock are reserved for issuance under the plan at September 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:

4 unchanged sentences

SPS COMMERCE, INC.

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

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

NOTE L – Income Taxes

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

1 unchanged sentence

Realized gain from foreign currency on cash and investments held 1,077 98 2,636 525

Other income (expense), net 7 ( 19 ) ( 44 ) ( 7 )

Other expense, net ( 3 ) ( 1,031 ) ( 47 ) ( 1,038 )

Total other income, net $ 3,778 $ 1,702 $ 10,966 $ 4,859

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

1 unchanged sentence

SPS COMMERCE, INC.

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

Form 10-Q for the Quarterly Period ended September 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