SPS COMMERCE INC 10-Q

Item 1. Financial Statements SPS COMMERCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except shares) June 30, 2026 December 31, 2025 ASSETS (unaudited) Current assets Cash and cash equivalents $ 173,167 $ 151,355 Accounts receivable 71,681 75,295 Allowance for credit losses ( 7,994 ) ( 7,129 ) Accounts receivable, net 63,687 68,166 Deferred costs 64,001 66,693 Other assets 29,541 49,090 Total current assets 330,396 335,304 Property and equipment, net 44,142 43,117 Operating lease right-of-use assets 4,985 5,025 Goodwill 539,411 541,719 Intangible assets, net 172,446 215,815 Other assets Deferred costs, non-current 20,296 20,719 Deferred income tax assets 514 493 Other assets, non-current 13,239 7,667 Total assets $ 1,125,429 $ 1,169,859 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 9,484 $ 13,757 Accrued compensation 39,470 47,577 Accrued expenses 14,901 13,074 Deferred revenue 80,867 75,590 Operating lease liabilities 1,540 4,353 Total current liabilities 146,262 154,351 Other liabilities Deferred revenue, non-current 4,720 5,288 Operating lease liabilities, non-current 4,766 2,839 Deferred income tax liabilities 30,928 33,201 Other liabilities, non-current 271 287 Total liabilities 186,947 195,966 Commitments and contingencies (Note I) Stockholders' equity Preferred stock, $ 0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding — — Common stock, $ 0.001 par value; 110,000,000 shares authorized; 40,392,619 and 40,048,410 shares issued; and 36,194,528 and 37,517,239 shares outstanding, respectively 40 40 Treasury stock, at cost; 4,198,091 and 2,531,171 shares, respectively ( 276,922 ) ( 177,949 ) Additional paid-in capital 763,354 722,737 Retained earnings 456,031 429,438 Accumulated other comprehensive loss ( 4,021 ) ( 373 ) Total stockholders’ equity 938,482 973,893 Total liabilities and stockholders’ equity $ 1,125,429 $ 1,169,859 See accompanying notes to these condensed consolidated financial statements. SPS COMMERCE, INC. 3 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents SPS COMMERCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share amounts) (unaudited) 2026 2025 2026 2025 Revenues $ 197,815 $ 187,400 $ 389,936 $ 368,949 Cost of revenues 59,028 59,826 118,245 116,740 Gross profit 138,787 127,574 271,691 252,209 Operating expenses Sales and marketing 43,936 43,434 88,670 85,068 Research and development 16,957 17,271 34,874 34,710 General and administrative 36,646 30,890 73,020 61,908 Amortization of intangible assets 9,381 9,509 18,701 18,097 Loss on sale of business 23,454 — 23,454 — Total operating expenses 130,374 101,104 238,719 199,783 Income from operations 8,413 26,470 32,972 52,426 Other income, net 1,997 773 3,402 2,980 Income before income taxes 10,410 27,243 36,374 55,406 Income tax expense 3,546 7,510 9,781 13,477 Net income $ 6,864 $ 19,733 $ 26,593 $ 41,929 Other comprehensive income (expense) Foreign currency translation adjustments ( 2,333 ) 8,151 ( 3,648 ) 10,378 Comprehensive income $ 4,531 $ 27,884 $ 22,945 $ 52,307 Net income per share Basic $ 0.19 $ 0.52 $ 0.72 $ 1.10 Diluted $ 0.19 $ 0.52 $ 0.72 $ 1.10 Weighted average common shares used to compute net income per share Basic 36,533 37,965 36,953 37,978 Diluted 36,577 38,099 37,026 38,132 See accompanying notes to these condensed consolidated financial statements. SPS COMMERCE, INC. 4 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents SPS COMMERCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Gain (Loss) Total Stockholders' Equity (in thousands, except shares) (unaudited) Shares Amount Shares Amount Balances, March 31, 2025 38,001,227 $ 40 1,831,869 $ ( 102,096 ) $ 672,138 $ 358,295 $ ( 7,456 ) $ 920,921 Stock-based compensation — — — — 14,219 — — 14,219 Shares issued pursuant to stock awards 27,642 — — — 1,741 — — 1,741 Employee stock purchase plan activity 43,349 — — — 5,015 — — 5,015 Repurchases of common stock, net of costs ( 144,786 ) — 144,786 ( 20,000 ) — — — ( 20,000 ) Net income — — — — — 19,733 — 19,733 Foreign currency translation adjustments — — — — — — 8,151 8,151 Balances, June 30, 2025 37,927,432 $ 40 1,976,655 $ ( 122,096 ) $ 693,113 $ 378,028 $ 695 $ 949,780 Balances, March 31, 2026 36,948,282 $ 40 3,292,276 $ ( 226,903 ) $ 741,544 $ 449,167 $ ( 1,688 ) $ 962,160 Stock-based compensation — — — — 17,886 — — 17,886 Shares issued pursuant to stock awards 73,768 — — — 123 — — 123 Employee stock purchase plan activity 78,293 — — — 3,801 — — 3,801 Repurchases of common stock, net of costs ( 905,815 ) — 905,815 ( 50,019 ) — — — ( 50,019 ) Net income — — — — — 6,864 — 6,864 Foreign currency translation adjustments — — — — — — ( 2,333 ) ( 2,333 ) Balances, June 30, 2026 36,194,528 $ 40 4,198,091 $ ( 276,922 ) $ 763,354 $ 456,031 $ ( 4,021 ) $ 938,482 SPS COMMERCE, INC. 5 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Gain (Loss) Total Stockholders' Equity (in thousands, except shares) (unaudited) Shares Amount Shares Amount Balances, December 31, 2024 37,661,308 $ 40 1,928,968 $ ( 99,748 ) $ 627,982 $ 336,099 $ ( 9,683 ) $ 854,690 Stock-based compensation — — — — 27,357 — — 27,357 Shares issued pursuant to stock awards 267,832 — — — 2,406 — — 2,406 Employee stock purchase plan activity 45,979 — — — 5,426 — — 5,426 Repurchases of common stock, net of costs ( 425,787 ) — 425,787 ( 60,000 ) — — — ( 60,000 ) Reissuances of treasury stock 378,100 — ( 378,100 ) 37,652 29,942 — — 67,594 Net income — — — — — 41,929 — 41,929 Foreign currency translation adjustments — — — — — — 10,378 10,378 Balances, June 30, 2025 37,927,432 $ 40 1,976,655 $ ( 122,096 ) $ 693,113 $ 378,028 $ 695 $ 949,780 Balances, December 31, 2025 37,517,239 $ 40 2,531,171 $ ( 177,949 ) $ 722,737 $ 429,438 $ ( 373 ) $ 973,893 Stock-based compensation — — — — 35,193 — — 35,193 Shares issued pursuant to stock awards 259,121 — — — 1,103 — — 1,103 Employee stock purchase plan activity 85,088 — — — 4,321 — — 4,321 Shares withheld for net share settlement ( 3,384 ) — 3,384 ( 319 ) — — — ( 319 ) Repurchases of common stock, net of costs ( 1,663,536 ) — 1,663,536 ( 98,654 ) — — — ( 98,654 ) Net income — — — — — 26,593 — 26,593 Foreign currency translation adjustments — — — — — — ( 3,648 ) ( 3,648 ) Balances, June 30, 2026 36,194,528 $ 40 4,198,091 $ ( 276,922 ) $ 763,354 $ 456,031 $ ( 4,021 ) $ 938,482 See accompanying notes to these condensed consolidated financial statements. SPS COMMERCE, INC. 6 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents SPS COMMERCE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, (in thousands) (unaudited) 2026 2025 Cash flows from operating activities Net income $ 26,593 $ 41,929 Reconciliation of net income to net cash provided by operating activities Deferred income taxes ( 4,412 ) ( 5,914 ) Depreciation and amortization of property and equipment 11,984 9,948 Amortization of intangible assets 18,701 18,097 Provision for credit losses 4,621 4,111 Stock-based compensation 36,769 28,865 Loss on sale of business 23,454 — Other, net ( 1,445 ) 274 Changes in assets and liabilities, net of effects of acquisitions Accounts receivable ( 2,139 ) ( 13,713 ) Deferred costs 2,797 ( 412 ) Other assets and liabilities 11,871 ( 2,258 ) Accounts payable ( 3,236 ) 2,082 Accrued compensation ( 9,551 ) ( 11,006 ) Accrued expenses 1,419 ( 1,833 ) Deferred revenue 5,087 3,012 Operating leases ( 854 ) ( 876 ) Net cash provided by operating activities 121,659 72,306 Cash flows from investing activities Purchases of property and equipment ( 15,738 ) ( 12,815 ) Proceeds from sale, net 8,768 — Acquisition of business, net — ( 142,628 ) Net cash used in investing activities ( 6,970 ) ( 155,443 ) Cash flows from financing activities Repurchases of common stock ( 98,358 ) ( 59,558 ) Net proceeds from exercise of options to purchase common stock 866 2,406 Net proceeds from employee stock purchase plan activity 4,321 5,426 Net cash used in financing activities ( 93,171 ) ( 51,726 ) Effect of foreign currency exchange rate changes 294 1,449 Net increase (decrease) in cash and cash equivalents 21,812 ( 133,414 ) Cash and cash equivalents at beginning of period 151,355 241,017 Cash and cash equivalents at end of period $ 173,167 $ 107,603 See accompanying notes to these condensed consolidated financial statements. SPS COMMERCE, INC. 7 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents SPS COMMERCE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A – General Business Description 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. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SPS Commerce, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. This interim financial information has been prepared under the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”). We have included all normal recurring adjustments which are, in the opinion of management, considered necessary to provide a fair presentation of our financial position, results of operations, stockholders’ equity, and cash flows for the interim periods presented. Operating results for these interim periods are not necessarily indicative of the results to be expected for the full year. Use of Estimates Preparing financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant Accounting Policies There were no material changes in our significant accounting policies, nor were there differences in the basis of our segmentation, during the six months ended June 30, 2026 . See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC. SPS COMMERCE, INC. 8 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Accounting Pronouncements Recently Adopted Standard Date of Issuance Description Date of Adoption Effect on the Financial Statements ASU 2025-05 , Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets July 2025 This amendment allows for entities to elect a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. 2026 Upon adoption, the Company elected not to apply the current conditions practical expedient. The adoption did not have a material impact on our financial statements and related disclosures. Accounting Pronouncements Not Yet Adopted Standard Date of Issuance Description Year of Required Adoption Effect on the Financial Statements ASU 2024-03 , Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) November 2024 This amendment requires that an entity disclose in its notes to financial statements specified information about certain costs and expenses. 2027 We are currently evaluating the adoption on our financial statements and anticipate the impact will result in additional disclosure. ASU 2025-06 , Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) September 2025 This amendment modernizes the accounting for software costs under Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software by removing all references to software development project stages. The amendment requires an entity to begin capitalizing software costs when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. 2028 We are currently evaluating the adoption on our financial statements and related disclosures. ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvement December 2025 The amendments in this update result in a comprehensive list of interim disclosures that are required by GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. 2028 We are currently evaluating the adoption on our interim financial statements and related disclosures. ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) May 2026 This standard establishes guidance for the recognition, measurement, presentation, and disclosure of environmental credits and environmental credit obligations. 2028 We are currently evaluating the adoption, but do not expect a material impact on our financial statements and related disclosures. SPS COMMERCE, INC. 9 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents NOTE B – Business Acquisitions and Other Transactions Divestiture of 3P Revenue Recovery Business On June 30, 2026, we completed our sale of the third-party ("3P") portion of the revenue recovery business and received $ 8.8 million in cash, net of cash transferred . The transaction enables us to focus on first-party ("1P") suppliers whose retail trading relationships are better aligned with our core solutions. The assets and liabilities transferred in the transaction primarily consisted of intangible assets as well as goodwill and working capital balances associated with the divested business. The divested business represented an immaterial portion of our consolidated operations and financial position. In connection with the sale, we recognized a loss of approximately $ 23.5 million, which is included in operating income in the accompanying condensed consolidated statements of comprehensive income. The transaction did not qualify for discontinued operations presentation and does not represent a strategic shift nor is it expected to have a material impact on the Company's future consolidated results of operations, financial position, or cash flows. Carbon6 Technologies, Inc. On December 30, 2024, we entered into a definitive agreement to acquire all of the outstanding equity ownership interests of Carbon6 Technologies, Inc. ("Carbon6"), a provider of software tools to Amazon sellers, including specialized offerings for revenue recovery for both 1P and 3P suppliers. The acquisition became effective on February 4, 2025 ("Close"). Pursuant to the definitive agreement, the total consideration transferred was $ 210.2 million, net of cash acquired. The consideration was comprised of $ 142.5 million paid in cash, net of cash acquired, and 378,100 shares of SPS common stock (valued at $ 67.7 million, determined at acquisition Close based on the price of SPS common stock). The shares were issued from SPS treasury shares. The purchase accounting for the acquisition is final. The goodwill associated with the acquisition is not deductible for income tax purposes. SPS COMMERCE, INC. 10 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Purchase Price Allocations 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 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) Carbon6 Cash paid $ 144,855 Equity consideration 67,672 Total consideration $ 212,527 Estimated fair value of assets and liabilities acquired: Cash 2,306 Accounts receivable 5,868 Other assets, current and non-current 8,695 Intangible assets Customer relationships 44,535 Developed technology 29,370 Deferred revenue ( 604 ) Other liabilities, current and non-current ( 10,162 ) Deferred income tax liabilities, net ( 3,753 ) Total fair value of assets and liabilities acquired $ 76,255 Goodwill $ 136,272 The following table summarizes the estimated useful lives for each acquired intangible asset: Carbon6 Customer relationships 8.0 years Developed technology 9.0 years NOTE C – Revenue Revenue by Product Type We derive our revenues from the following revenue streams: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Recurring revenues: Fulfillment $ 169,979 $ 158,991 $ 334,288 $ 311,622 Analytics 14,139 13,944 28,271 27,646 Other 6,304 6,186 12,383 12,182 Recurring revenues 190,422 179,121 374,942 351,450 One-time revenues 7,393 8,279 14,994 17,499 Total revenue $ 197,815 $ 187,400 $ 389,936 $ 368,949 SPS COMMERCE, INC. 11 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Revenue by Geographic Area 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 June 30, 2026 2025 2026 2025 Domestic revenue 83 % 85 % 83 % 85 % No single jurisdiction outside of the U.S. had revenues in excess of 10%. Recurring Revenues 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. Revenue for subscription-based services is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our contracts primarily range from monthly to annual and generally allow the customer to cancel the contract for any reason with 30 to 90 days’ notice. Timing of billings varies by customer and by contract type and are either in advance or within 30 days of the service being performed. 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 One-time revenues consist of set-up fees and miscellaneous fees from customers. Set-up revenues 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. The table below presents the activity of the portion of the deferred revenue liability relating to set-up fees. We expect to recognize $ 10.6 million of the balance as of June 30, 2026 as revenue over the next 12 months with the remaining amount recognized thereafter. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Balance, beginning of period $ 14,426 $ 15,696 $ 14,625 $ 16,735 Invoiced set-up fees 3,276 3,542 6,934 6,949 Recognized set-up fees ( 3,733 ) ( 4,231 ) ( 7,590 ) ( 8,677 ) Balance, end of period $ 13,969 $ 15,007 $ 13,969 $ 15,007 Miscellaneous one-time revenues Miscellaneous one-time fees primarily consist of professional services and testing and certification. The contract period for these one-time fees is one year or less and recognized at the time service is provided. 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. SPS COMMERCE, INC. 12 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Deferred Revenue We recognized reven ue of $ 59.6 million and $ 58.4 million in the six months ended June 30, 2026 and 2025, respectively, from amounts included in deferred revenue at the beginning of the period. NOTE D – Deferred Costs The deferred costs activity was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Balance, beginning of period $ 86,200 $ 88,523 $ 87,412 $ 85,914 Incurred deferred costs 21,365 24,112 42,875 52,730 Amortized deferred costs ( 23,268 ) ( 24,731 ) ( 45,990 ) ( 50,740 ) Balance, end of period $ 84,297 $ 87,904 $ 84,297 $ 87,904 NOTE E – Fair Value Measurements Cash equivalents, as measured at fair value on a recurring basis, consisted of the following: June 30, 2026 December 31, 2025 Fair Value Level Amortized Cost Unrealized Gains (Losses), net Fair Value Amortized Cost Unrealized Gains (Losses), net Fair Value (in thousands) Cash equivalents: Money market funds Level 1 $ 99,885 $ — $ 99,885 $ 117,685 $ — $ 117,685 NOTE F – Allowance for Credit Losses The allowance for credit losses activity, included in accounts receivable, net, was as follows: Six Months Ended June 30, (in thousands) 2026 2025 Balance, beginning of period $ 7,129 $ 4,179 Provision for credit losses 4,621 4,111 Write-offs, net of recoveries ( 3,756 ) ( 3,004 ) Balance, end of period $ 7,994 $ 5,286 SPS COMMERCE, INC. 13 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents NOTE G – Property and Equipment, Net Property and equipment, net consisted of the following: (in thousands) June 30, 2026 December 31, 2025 Internally developed software $ 103,170 $ 94,859 Computer equipment 26,572 25,462 Leasehold improvements 16,104 15,044 Office equipment and furniture 9,552 9,159 Property and equipment, cost 155,398 144,524 Less: accumulated depreciation and amortization ( 111,256 ) ( 101,407 ) Total property and equipment, net $ 44,142 $ 43,117 Property and equipment, net located outside of the U.S. was as follows: June 30, 2026 December 31, 2025 International property and equipment 25 % 26 % NOTE H – Goodwill and Intangible Assets, Net Goodwill The activity in goodwill was as follows: (in thousands) Six Months Ended June 30, 2026 Balance, beginning of period $ 541,719 Disposition due to divestiture ( 2,344 ) Foreign currency translation and other 36 Balance, end of period $ 539,411 Intangible Assets Intangible assets, net consisted of the following: June 30, 2026 ($ in thousands) Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Weighted Average Remaining Amortization Period Customer relationships $ 200,682 $ ( 80,120 ) $ ( 575 ) $ 119,987 6.1 years Developed technology 95,201 ( 42,520 ) ( 222 ) 52,459 5.4 years $ 295,883 $ ( 122,640 ) $ ( 797 ) $ 172,446 5.9 years December 31, 2025 ($ in thousands) Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Weighted Average Remaining Amortization Period Customer relationships $ 214,451 $ ( 70,050 ) $ 2,019 $ 146,420 6.6 years Developed technology 105,599 ( 37,198 ) 994 69,395 6.1 years $ 320,050 $ ( 107,248 ) $ 3,013 $ 215,815 6.4 years SPS COMMERCE, INC. 14 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents The estimated future annual amortization expense related to intangible assets is as follows: (in thousands) Remainder of 2026 $ 16,916 2027 33,367 2028 32,044 2029 25,605 2030 23,413 Thereafter 41,101 Total future amortization $ 172,446 NOTE I – Commitments and Contingencies Leases Effective October 1, 2025, we executed the sixth amendment to our lease agreement (the "Amendment") for our current headquarters located in Minneapolis, Minnesota where we lease approximately 198,000 square feet. The Amendment extends the lease term to end in July 2043 and provides approximately $ 33 million of lease incentives, which were included in the initial measurement of the operating lease right-of-use asset. The Company expects to utilize approximately $ 18 million of these lease incentives during the year ending December 31, 2027, with the remaining balance to be utilized thereafter. The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Operating lease cost $ 830 $ 1,294 $ 1,594 $ 2,215 Variable lease cost 1,076 934 1,971 1,816 $ 1,906 $ 2,228 $ 3,565 $ 4,031 Supplemental cash flow information related to leases was as follows: Six Months Ended June 30, (in thousands) 2026 2025 Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from operating leases $ 2,375 $ 3,124 Right-of-use assets obtained in exchange for operating lease liabilities 1,849 1,092 Supplemental balance sheet information related to operating leases was as follows: June 30, 2026 December 31, 2025 Weighted-average remaining lease term 10.9 years 11.0 years Weighted-average discount rate 5.9 % 6.0 % SPS COMMERCE, INC. 15 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Future minimum lease payments under operating leases are presented net of lease incentives deemed payable at lease commencement. At June 30, 2026, our future minimum payments under operating leases were as follows: (in thousands) Remainder of 2026 $ 2,230 2027 ( 16,584 ) 2028 1,607 2029 3,164 2030 3,139 Thereafter 30,149 Total future gross payments 23,705 Less: imputed interest ( 17,399 ) Total operating lease liabilities $ 6,306 Purchase Commitments 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 2030. At June 30, 2026, our remaining purchase commitments and estimated purchase timing were as follows: (in thousands) Remainder of 2026 $ 4,791 2027 18,936 2028 19,930 2029 18,089 2030 87 Total estimated future purchases $ 61,833 NOTE J – Stockholders’ Equity Share Repurchase Programs Our Board of Directors has authorized multiple non-concurrent programs to repurchase our common stock. On February 10, 2026 (announced February 12, 2026), our Board of Directors approved an additional $ 200.0 million in repurchase authority under our previously announced share repurchase program ("2025 Program") that was approved on October 29, 2025 to repurchase up to $ 100.0 million of our common stock, excluding costs to obtain, for a total authorized repurchase amount of $ 300.0 million. 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 became effective December 1, 2025 and expires on December 1, 2027. Details of the programs and activity thereunder through June 30, 2026 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 2024 Program August 2024 July 2026 $ 100,000 $ 99,990 $ 10 N/A 2025 Program December 2025 December 2027 $ 300,000 $ 113,620 N/A $ 186,380 SPS COMMERCE, INC. 16 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents 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. Share repurchases that have not yet settled in cash are included in accounts payable in the condensed consolidated balance sheet. The share repurchase activity by period was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except shares and per share amounts) 2026 2025 2026 2025 Number of shares repurchased 905,815 144,786 1,663,536 425,787 Total share repurchased cost $ 50,019 $ 20,000 $ 98,654 $ 60,000 Average total cost per repurchased share $ 55.22 $ 138.13 $ 59.30 $ 140.92 Treasury Stock Reissuance In connection with the acquisition of Carbon6, t he Company re-issued treasury shares as part of the purchase consideration (see Note B – Business Acquisitions and Other Transactions for further information). NOTE K – Stock-Based Compensation Our equity compensation plans include grants of incentive and nonqualified stock options, performance share units (“PSUs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and deferred stock units (“DSUs”), to employees, executive officers, and non-employee directors. We also provide an employee stock purchase plan (“ESPP”) and 401(k) match to eligible participants. At June 30, 2026, there were 10.5 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 June 30, (in thousands) 2026 2025 2026 2025 Cost of revenues $ 3,248 $ 3,328 $ 6,404 $ 6,439 Operating expenses Sales and marketing 3,999 3,357 8,259 5,784 Research and development 2,406 2,135 4,671 4,152 General and administrative 9,043 6,178 17,435 12,490 $ 18,696 $ 14,998 $ 36,769 $ 28,865 Stock-based compensation expense by grant type or plan was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Stock options $ 535 $ 472 $ 1,026 $ 1,021 PSUs 4,128 3,127 8,662 6,134 RSUs & DSUs 12,500 9,837 23,926 18,470 RSAs — — — 113 ESPP 716 783 1,541 1,619 401(k) stock match 817 779 1,614 1,508 $ 18,696 $ 14,998 $ 36,769 $ 28,865 As of June 30, 2026, there was $ 115.2 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 2.7 years. SPS COMMERCE, INC. 17 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Stock Options Our stock option activity was as follows: Six Months Ended June 30, 2026 Options (#) Weighted Average Exercise Price ($/share) Outstanding, beginning of period 261,403 $ 121.47 Granted 132,688 57.93 Exercised ( 20,656 ) 53.40 Forfeited ( 8,340 ) 118.31 Outstanding, end of period 365,095 $ 102.30 Of the total outstanding options at June 30, 2026, 0.2 million were exercisable. The outstanding and exercisable options had a weighted average exercise price of $ 119.00 per share and a weighted average remaining contractual life of 2.7 years. The weighted average grant date fair value of options granted during the six months ended June 30, 2026, was $ 20.76 per share. This was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Life (in years) 4.0 Volatility 39.9 % Dividend yield — Risk-free interest rate 3.6 % Performance Share Units, Restricted Stock Units and Awards, and Deferred Stock Units In each of the quarters ended March 31, 2026, 2025, 2024, and 2023, we granted PSU awards with a target performance level. These awards are earned based upon our Company’s total shareholder return as compared to an indexed total shareholder return over the course of a fiscal based three-year performance period, starting in the year of grant. Earned awards vest in the quarter following the conclusion of the performance period. During the three months ended March 31, 2026, PSU awards granted in 2023 vested without achievement of the minimum threshold of performance level and therefore no shares of common stock were issued. Activity for our PSUs, RSUs, RSAs, and DSUs in aggregate was as follows: Six Months Ended June 30, 2026 # Weighted Average Grant Date Fair Value ($/share) Outstanding, beginning of period 1,006,417 $ 150.69 Granted 1,038,439 63.18 Vested and common stock issued ( 238,465 ) 136.77 Forfeited ( 121,171 ) 215.77 Outstanding, end of period 1,685,220 $ 94.05 The number of PSUs, RSUs, RSAs, and DSUs outstanding at June 30, 2026 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. SPS COMMERCE, INC. 18 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents Employee Stock Purchase Plan Our ESPP activity was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except shares) 2026 2025 2026 2025 Amounts for shares purchased $ 3,801 $ 5,015 $ 4,321 $ 5,426 Shares purchased 78,293 43,349 85,088 45,979 A total of 1.4 million shares of common stock are reserved for issuance under the ESPP at June 30, 2026. 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: Life (in years) 0.5 Volatility 55.7 % Dividend yield — Risk-free interest rate 3.7 % NOTE L – Income Taxes We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust the provision for discrete tax items recorded in the period. Our provision for income taxes includes current federal, state, and foreign income tax expense, as well as deferred tax expense. Differences between our effective tax rate and statutory tax rates are primarily due to the impact of permanently non-deductible expenses partially offset by the federal research and development credits and tax benefits associated with foreign-derived deduction-eligible income. 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. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the U.S., making permanent most of the expiring key provisions of the 2017 Tax Cuts and Jobs Act, including, but not limited to, U.S. corporate international tax provisions, federal bonus depreciation, and deductions for domestic research and development expenditures. We evaluated the OBBBA and estimate the 2026 impact to be primarily a reduction in cash taxes due to the accelerated deduction of previously capitalized research and experimental expenditures. We continue to monitor the impact of state conformity legislation. The remaining provisions of the OBBBA are not expected to have a material impact. NOTE M – Other Income and Expense Other income, net included the following: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Investment income $ 1,210 $ 688 $ 2,362 $ 2,537 Realized gain from investments and foreign currency transactions 402 107 522 473 Other income (expense), net 385 ( 22 ) 518 ( 30 ) Total other income, net $ 1,997 $ 773 $ 3,402 $ 2,980 SPS COMMERCE, INC. 19 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents NOTE N – Net Income Per Share The components and computation of basic and diluted net income per share were as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share amounts) 2026 2025 2026 2025 Numerator Net income $ 6,864 $ 19,733 $ 26,593 $ 41,929 Denominator Weighted average common shares outstanding, basic 36,533 37,965 36,953 37,978 Options to purchase common stock and ESPP — 73 5 86 PSUs, RSUs, RSAs, and DSUs 44 61 68 68 Weighted average common shares outstanding, diluted 36,577 38,099 37,026 38,132 Net income per share Basic $ 0.19 $ 0.52 $ 0.72 $ 1.10 Diluted $ 0.19 $ 0.52 $ 0.72 $ 1.10 The number of outstanding potential common shares that were excluded from the calculation of diluted net income per share as they were anti-dilutive was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2026 2025 2026 2025 Anti-dilutive shares 1,038 307 880 319 SPS COMMERCE, INC. 20 Form 10-Q for the Quarterly Period ended June 30, 2026 Table of Contents