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SPS COMMERCE INC (SPSC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue grew 22% year over year to $187.4 million; non-GAAP diluted EPS was $1.00 and adjusted EBITDA rose 27% to $56.1 million . Versus consensus, revenue beat by ~$1.6 million and normalized EPS beat by ~$0.09 (Primary EPS) for Q2 2025, a positive surprise driven by resilient demand and operating leverage *.
  • Fiscal 2025 guidance was raised on EPS and EBITDA: FY revenue $759.0–$763.0 million (19–20% YoY), GAAP diluted EPS $2.17–$2.22 (prior $2.06–$2.13), non-GAAP EPS $3.99–$4.04 (prior $3.86–$3.93), and adjusted EBITDA $230.7–$233.7 million (prior $229.4–$232.9) .
  • Q3 2025 guidance calls for revenue of $191.7–$193.2 million (17–18% YoY), non-GAAP diluted EPS $0.96–$1.00, and adjusted EBITDA $57.9–$59.9 million, underscoring continued growth and margin expansion .
  • Management highlighted tariff-related caution among U.S. suppliers (longer deal cycles, spend scrutiny), but ongoing strength in retailer enablement activity and sticky fulfillment demand; ARPU headwinds from Carbon6’s smaller customers were noted, while long-term organic growth is expected to be at least high single digits, excluding M&A .

Estimates marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • “We delivered strong second-quarter performance… we remain confident in our full-year 2025 outlook,” reflecting 22% revenue growth, 24% recurring revenue growth, $1.00 non-GAAP EPS, and 27% adjusted EBITDA growth .
    • CEO emphasized SPS as the “only full-service EDI solution” enabling compliance and collaboration; examples include Trader Joe’s accelerating toward 100% vendor compliance and large grocery retailers improving on-time/in-full metrics and reducing out-of-stocks using SPS performance tools .
    • Post-merger integration of SupplyPike and Carbon6 is “going very well,” expanding revenue recovery solutions and wallet share opportunities across retailers like Walmart, Target, Home Depot, and Amazon .

  • What Went Wrong

    • Supplier-side caution tied to tariffs led to spend scrutiny, slower deal cycles, and efforts to reduce variable spend, particularly impacting discretionary analytics connections; U.S. supplier caution was more pronounced than in Europe/Australia .
    • ARPU pressure from Carbon6’s smaller customer base: CFO cited ~54,500 recurring revenue customers and ARPU of ~$13,200, with Carbon6’s full-quarter impact lowering ARPU by ~$1,400 .
    • Management set medium-term organic revenue growth at “at least high single digits” beyond 2025, reflecting near-term macro uncertainty versus prior higher growth cadence .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$170.9 $181.5 $187.4
GAAP Diluted EPS ($)$0.46 $0.58 $0.52
Non-GAAP Diluted EPS ($)$0.89 $1.00 $1.00
Adjusted EBITDA ($USD Millions)$49.6 $54.4 $56.1
Adjusted EBITDA Margin (%)29% 30% 30%
Gross Profit ($USD Millions)$115.3 $124.6 $127.6
Consensus ComparisonQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD Millions)*$169.3$179.0$185.8
Primary EPS Consensus Mean ($)*$0.87$0.85$0.91
Actual Revenue ($USD Millions)$170.9 $181.5 $187.4
Actual EPS (Normalized) ($)$0.89 $1.00 $1.00

Estimates marked with * retrieved from S&P Global.

KPIs

KPIQ4 2024Q1 2025Q2 2025
Recurring Revenue YoY Growth (%)19% 23% 24%
Recurring Revenue Customers (approx)~45,350 ~54,150 ~54,500
ARPU (approx, $)~$13,300 ~$13,850 ~$13,200 (Carbon6 impact −$1,400)
Share Repurchases ($USD Millions)$37.6 (FY 2024) $40.0 (Q1) $20.0 (Q2)
Cash and Cash Equivalents ($USD Millions)$241.0 $94.9 $107.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 2025N/A$191.7–$193.2New
GAAP Diluted EPS ($)Q3 2025N/A$0.50–$0.54New
Non-GAAP Diluted EPS ($)Q3 2025N/A$0.96–$1.00New
Adjusted EBITDA ($USD Millions)Q3 2025N/A$57.9–$59.9New
Stock-based Comp ($USD Millions)Q3 2025N/A$16.0New
Depreciation ($USD Millions)Q3 2025N/A$5.6New
Amortization ($USD Millions)Q3 2025N/A$9.5New
Revenue ($USD Millions)FY 2025$758.5–$763.0 $759.0–$763.0 Maintained (midpoint slightly higher)
GAAP Diluted EPS ($)FY 2025$2.06–$2.13 $2.17–$2.22 Raised
Non-GAAP Diluted EPS ($)FY 2025$3.86–$3.93 $3.99–$4.04 Raised
Adjusted EBITDA ($USD Millions)FY 2025$229.4–$232.9 $230.7–$233.7 Raised
Stock-based Comp ($USD Millions)FY 2025$61.4 $60.9 Lowered slightly
Depreciation ($USD Millions)FY 2025$23.0 $21.8 Lowered
Amortization ($USD Millions)FY 2025$38.0 $37.1 Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Tariffs/MacroUncertainty could benefit collaboration investments; SPS relatively insulated given mission-critical, low price point Monitoring tariff impacts; enablement pipeline steady; demand for automation remains Supplier spend scrutiny and longer approvals; discretionary analytics most impacted; U.S. suppliers more cautious than EU/Australia Caution persists; operational resilience narrative strengthening
Retailer EnablementStrong pipeline; community campaigns drive net adds and wallet share Net ~300 organic adds; enablement mix with new retailers; capacity to scale Pipeline healthy; retailers steady; stickiness in fulfillment; onboarding efficiency improvements Sustained driver of growth
Revenue Recovery (SupplyPike/Carbon6)Strategic expansion into revenue recovery; cross-sell opportunity Early cross-sell validation; Carbon6 customer base predominately 3P Amazon Post-merger GTM integration progressing; broader retailer coverage; network data aids opportunity identification Integration progressing; opportunity expanding
Analytics8% FY24 growth; more macro-sensitive Down ~2% YoY in Q1; expected ~flat for FY25 Customers trimming less strategic data feeds; discretionary sensitivity persists Stable-to-soft near term
AI/Technology InitiativesNot highlightedContinued internal efficiency focus; gross margin improvements Introducing generative/agentic AI to onboarding processes to reduce time-to-value Building momentum
Long-term OutlookTAM ~$11.1B; wallet share potential across sizes FY25 guide reiterated; investment cadence carefully timed Post-2025 organic growth “at least high single digits,” annual adjusted EBITDA margin expansion target ~200 bps (excluding M&A) Resetting expectations, focusing on margin expansion

Management Commentary

  • CEO: “SPS Commerce is the only full-service EDI solution on the market… Our product portfolio enables a stronger collaboration between trading partners, unlocking greater efficiency, cost savings, and shared success.”
  • CFO: “We delivered strong second-quarter performance, and we remain confident in our full-year 2025 outlook… we expect to expand adjusted EBITDA margin by 2% annually” (ex acquisitions) .
  • CEO (On integration): “Post-merger integration for both SupplyPike and Carbon6 is going very well… we can offer the supplier revenue recovery solutions across more retailers” .
  • CEO (On onboarding efficiency): “We’ve been focused… and have seen positive improvements… as we’re starting to introduce generative AI and agentic AI… very optimistic we’ll continue the improvement” .

Q&A Highlights

  • Macro/tariffs: Suppliers are scrutinizing spend, slowing deal cycles, and reducing variable document plans; analytics most affected; fulfillment remains sticky; effects concentrated in U.S. suppliers .
  • Growth mix/ARPU: Net customer adds primarily driven by enablement campaigns; largest upsell opportunity is increasing trading partner connections; ARPU decreased ~$1,400 from Carbon6 mix .
  • Integration/cross-sell: SupplyPike and Carbon6 GTM teams are being consolidated to sell complete revenue recovery solutions; lead-sharing with fulfillment to identify cross-sell opportunities using network data .
  • Guidance cadence: FY25 midpoint raised; beyond 2025, organic growth at least high single digits, with ~200 bps annual adjusted EBITDA margin expansion excluding M&A .
  • Regional dynamics: Less spend scrutiny in Europe/Australia vs. U.S.; midmarket ERP decisions experiencing delays, while enterprise demand remains healthy .

Estimates Context

  • Q2 2025 beat vs S&P Global consensus: Revenue $187.4 million vs $185.8 million*, and normalized EPS $1.00 vs $0.91*; Q1 also beat; Q4 slightly above revenue estimates and inline-to-better on normalized EPS *.
  • Implications: FY 2025 EPS and EBITDA guidance were raised, suggesting Street estimates should move higher for the back half, while near-term caution on analytics and supplier-side spend may temper out-year organic growth assumptions (post-2025) .

Estimates marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Strong execution: Broad-based topline acceleration (+22% YoY) with 30% adjusted EBITDA margin and non-GAAP EPS beat supports a resilient model despite tariff-related noise .
  • Guidance trajectory: FY 2025 EPS and EBITDA raised; Q3 outlook implies continued double-digit revenue growth and margin expansion, a likely positive revision catalyst for consensus .
  • Mix considerations: ARPU headwinds from Carbon6’s smaller customers are offset by enablement-driven net adds and upsell potential via more trading partner connections .
  • Strategic optionality: Revenue recovery integration (SupplyPike/Carbon6) and AI-enabled onboarding efficiency can expand wallet share and improve time-to-value, supporting durable margin gains .
  • Macro sensitivity: Expect analytics softness and longer supplier approval cycles while fulfillment remains sticky; monitor tariff and midmarket ERP dynamics for pacing of organic growth beyond 2025 .
  • Capital allocation: Continued buybacks ($20 million in Q2) and maintained cash/investments provide flexibility for M&A and organic investments .
  • Trading setup: Near-term, raised FY guide and Q3 outlook are constructive; medium term, watch ARPU mix normalization and cross-sell ramp to sustain double-digit growth and margin expansion .

Sources

  • Q2 2025 8-K 2.02 press release (financials and guidance): .
  • Q2 2025 earnings call transcript (prepared remarks and Q&A): .
  • Q1 2025 press release and call: .
  • Q4 2024 press release and call: .

Estimates marked with * retrieved from S&P Global.