Executive Summary

Q4 2024 revenue was $170.9M (+18% y/y) with non-GAAP diluted EPS of $0.89 (+18.7% y/y) and Adjusted EBITDA of $49.6M (+18% y/y); GAAP diluted EPS declined to $0.46 on lower other income and higher amortization, while net income margin fell to 10% vs 13% y/y .
FY24 delivered 19% revenue growth to $637.8M, non-GAAP EPS of $3.48, and Adjusted EBITDA of $186.6M (+18% y/y) .
Initial FY25 guide implies continued strong growth: revenue $758–$763M (+19–20% y/y), Adjusted EBITDA $227.5–$231.0M (+22–24% y/y), with Q1 2025 revenue $178.5–$180.0M (+19–20% y/y) and non-GAAP EPS $0.82–$0.84 .
Strategic catalysts: Carbon6 closed (expands revenue recovery across Amazon 1P/3P), updated TAM to ~$11.1B with ~275k potential customers and ~$40.5k ARPU framework; management expects gross margin improvements to drive EBITDA leverage in 2025 .

What Went Well and What Went Wrong

What Went Well
- 96th consecutive quarter of topline growth; Q4 revenue +18% y/y to $170.9M and Adjusted EBITDA +18% y/y to $49.6M, with non-GAAP EPS +18.7% y/y to $0.89 .
- Clear growth runway: FY25 guide for revenue +19–20% and Adjusted EBITDA +22–24%; management reiterated confidence in profitable growth and highlighted expected gross margin improvement in 2025 .
- Strategic expansion: Carbon6 acquisition completed, positioning SPS as a leading provider in invoice deduction management/revenue recovery for Amazon sellers (1P and 3P) and complementing SupplyPike .
- Management tone: “Uniquely positioned to support all trading relationships” and “leading retail network” supporting profitable growth trajectory .
What Went Wrong
- GAAP EPS declined y/y to $0.46 (from $0.51) as other income swung negative and amortization increased; net margin fell to 10% vs 13% y/y despite solid operating execution .
- Analytics growth was 8% in 2024 and remains more macro sensitive; management expects similar dynamics in 2025, tempering mix-led acceleration from that product line .
- ARPU cadence: wallet share was ~$13,300 in Q4 vs ~$13,700 in Q3; management previously noted Carbon6 adds ~6,500 lower-ARPU customers and could reduce ARPU by ~$1,000, affecting near-term mix optics .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$153.596	$163.686	$170.907
Net Income ($M)	$18.032	$23.460	$17.559
GAAP Diluted EPS ($)	$0.48	$0.62	$0.46
Non-GAAP Diluted EPS ($)	$0.80	$0.92	$0.89
Adjusted EBITDA ($M)	$44.189	$48.401	$49.639
Adjusted EBITDA Margin (%)	29%	30%	29%

KPIs and Operating Metrics

Customer and ARPU metrics (approximate, as presented by management):
- Recurring revenue customers: ~44,950 (Q2), ~45,200 (Q3), ~45,350 (Q4) .
- Wallet share (ARPU): ~$12,850 (Q2), ~$13,700 (Q3), ~$13,300 (Q4) .
Liquidity snapshot (management remarks): Total cash and investments of ~$272M (Q2), ~$206M (Q3), and ~$241M (Q4) .

FY 2024 (for context)

Revenue $637.8M; non-GAAP diluted EPS $3.48; Adjusted EBITDA $186.6M; Recurring revenue +20% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q1 2025	—	$178.5–$180.0 (+19–20% y/y)	New
GAAP diluted EPS ($)	Q1 2025	—	$0.39–$0.41	New
Non-GAAP diluted EPS ($)	Q1 2025	—	$0.82–$0.84	New
Adjusted EBITDA ($M)	Q1 2025	—	$49.5–$50.5	New
SBC / D&A ($M)	Q1 2025	—	SBC ~$15.0; Dep ~$5.4; Amort ~$9.2	New
Revenue ($M)	FY 2025	—	$758.0–$763.0 (+19–20% y/y)	New
GAAP diluted EPS ($)	FY 2025	—	$1.93–$1.99	New
Non-GAAP diluted EPS ($)	FY 2025	—	$3.78–$3.84	New
Adjusted EBITDA ($M)	FY 2025	—	$227.5–$231.0 (+22–24% y/y)	New
SBC / D&A ($M)	FY 2025	—	SBC ~$63.0; Dep ~$23.5; Amort ~$39.8	New
Effective tax rate	FY 2025	—	~30% on GAAP pretax earnings	New
FY 2024 “vs guide”	FY 2024	Rev $635.4–$636.4; non-GAAP EPS $3.41–$3.42; Adj EBITDA $185.0–$185.7	Rev $637.8; non-GAAP EPS $3.48; Adj EBITDA $186.6	Above prior guide

Note: FY25 guidance is inclusive of expected Carbon6 results .

Earnings Call Themes & Trends

Topic	Q2 2024 (prior)	Q3 2024 (prior)	Q4 2024 (current)	Trend
TAM / ARPU	Discussed network-led secular tailwinds; product expansion (Traverse) .	Preparing to refresh TAM; acquisitions broaden portfolio .	Updated TAM ~$11.1B and ~275k potential customers; ARPU framework ~$40.5k; confidence in wallet share expansion .	Expanding scope; more detailed TAM framework.
Community enablement pipeline	Healthy, but H2 biased to wallet share expansion .	Pipeline strong; Q4 mix less concentrated in existing customers than H1; FY24 guide reiterated .	Q1 2025 customer adds/wallet share mix similar to Q4; continued robust enablement visibility .	Sustained pipeline; mix fluctuates.
Gross margin/EBITDA leverage	Anticipated gross margin improvement starting H2’24 .	Target 15–25% EBITDA dollar growth; margin model 35% LT .	2025 EBITDA growth above 2024 pace; gross margin improvement main driver .	Margin expansion expected to re-accelerate.
Analytics product	Sequentially softer growth; macro sensitivity .	Expect HSD 2024; discretionary vs Fulfillment .	FY24 +8%; expect similar in 2025 given macro sensitivity .	Steady but softer vs Fulfillment.
Acquisitions (SupplyPike, Traverse, Carbon6)	Traverse closed; integration and retailer sell-in .	SupplyPike integration; cross-sell to suppliers; Traverse expands retailer-facing suite .	Carbon6 closed; Amazon 1P/3P revenue recovery; Q1 revenue contribution; ARPU dilution from low-priced 3P base .	Platform broadening; cross-sell upsides; near-term ARPU mix effects.
Macro / tariffs / supply chain	Not a macro bellwether; uncertainty noted .	Balanced demand; sustained enablement programs .	Tariff/macro uncertainty drives need for collaboration; likely supportive of SPS solutions .	Uncertainty a relative tailwind for mission-critical connectivity.
Amazon/UPS changes	—	—	UPS cuts on Amazon parcels seen as non-impact; FBA capacity sufficient .	No expected disruption.
International expansion (Europe)	TIE Kinetix beachhead; go-to-market learnings .	Early innings; community/channel seen transferable with localization .	2025 plan to launch community enablement in Europe; channel to follow .	Building toward EU execution.

Management Commentary

Strategic positioning: “With the depth and breadth of solutions we offer today, we are uniquely positioned to support all trading relationships and continue growing our network to move the world of commerce forward.” — CEO Chad Collins .
Profit profile: “We believe that SPS’ leading retail network and competitive product portfolio position us well to continue on our profitable growth trajectory.” — CFO Kim Nelson .
FY25 operating leverage: “Big driver [of higher EBITDA growth] is our expectations of continued improvement in gross margin… you started to see a little of it come through in ’24. Our expectation is you’ll see more come through in ’25.” — CFO Kim Nelson .
Carbon6 scope: “We don’t expect any impact [from UPS changes]. The majority of the third-party Amazon fulfillment… utilize [FBA]… we don’t anticipate any disruption.” — CEO Chad Collins .
TAM details: “We estimate our addressable market to be $11.1 billion globally including $6.5 billion in the U.S.… 275,000 recurring revenue customers on average spending approximately $40,500 per year.” — CEO Chad Collins .

Q&A Highlights

TAM methodology and ARPU uplift drivers: Wallet share opportunity anchored by more trading partner connections per customer; validation across small/medium/large cohorts; cross-sell from broader portfolio (analytics, revenue recovery) stronger in medium/large .
Enablement pipeline and mix: Q1 2025 expected mix similar to Q4 (customer count vs wallet share); robust visibility near term .
Macro/tariffs: Uncertainty increases need for collaboration; SPS’s mission-critical, lower-ticket nature mitigates macro headwinds seen by other supply chain apps .
Carbon6 contribution: FY25 ~$40M revenue and ~$5.5M Adjusted EBITDA (as previously guided); Q1 revenue a little over ~$5M and breakeven; closing confirmed with no change to outlook .
Margin outlook: 2025 EBITDA growth outpacing 2024 driven primarily by gross margin improvement as the business scales .
Analytics: 2024 growth 8%; remains most macro-sensitive product; 2025 expected similar .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 revenue, EPS, and EBITDA could not be retrieved due to S&P Global API daily request limits at the time of analysis; therefore, explicit “vs. consensus” comparisons are not included. If you’d like, I can refresh this section when SPGI access is available.
Management’s Q4 actuals relative to prior company guidance (from Q3) indicate FY24 results modestly above guidance on revenue, non-GAAP EPS, and Adjusted EBITDA (see Guidance Changes table) .

Key Takeaways for Investors

Durable growth: Q4 revenue +18% y/y; FY24 +19% with 96 consecutive quarters of growth; FY25 guide reiterates near-20% revenue growth—underscoring strong demand for mission-critical retail connectivity .
Profit leverage: 2025 Adjusted EBITDA growth (+22–24% y/y) outpacing revenue on gross margin improvement; margin expansion is a central part of the FY25 algorithm .
Platform breadth and cross-sell: Carbon6 (with SupplyPike, Traverse) extends leadership in revenue recovery and retailer performance management—expanding wallet-share potential and supplier value proposition .
Mix optics: Near-term ARPU may dilute as Carbon6’s lower-priced 3P base is consolidated; medium-term wallet share expansion opportunities (trading partner connections, cross-sell) should offset .
Pipeline visibility: Community enablement remains robust; Q1 2025 mix expected similar to Q4, with balanced contribution from customer adds and wallet share .
Analytics remains steady but macro-sensitive: Expect similar growth profile to 2024; Fulfillment remains the core growth engine .
International optionality: 2025 targeted launch of community enablement programs in Europe; channel initiatives to follow—early innings but strategic .

Appendix: Additional Context and Data

Other Relevant Press Releases in Q4 2024 Window

Carbon6 acquisition announced (1/2/25): ~$210M purchase price (40% stock), expected FY25 revenue ~$40M and Adj. EBITDA +$5.5M; Q1 revenue a little over ~$5M and breakeven .
Carbon6 acquisition completed (2/7/25) .

Prior Two Quarters (Q2 & Q3 2024) Highlights

Q3 2024: Revenue $163.7M (+21% y/y), non-GAAP EPS $0.92, Adj. EBITDA $48.4M (30% margin); Q4 2024 guide (given then) was $168.5–$169.5M revenue and $0.83–$0.84 non-GAAP EPS .
Q2 2024: Revenue $153.6M (+18% y/y), non-GAAP EPS $0.80, Adj. EBITDA $44.2M (29% margin); new $100M buyback; FY24 guidance at the time implied strong H2 .

Selected Q4 2024 Financial Statement Details (for reference)

Q4 2024 revenue $170.907M; cost of revenue $55.585M; gross profit $115.322M; operating income $24.744M; other income (expense), net $(0.373)M; net income $17.559M; diluted EPS $0.46 .
Non-GAAP diluted EPS $0.89; Adjusted EBITDA $49.639M; Adjusted EBITDA margin 29% .
FY24 revenue $637.765M; non-GAAP diluted EPS $3.48; Adjusted EBITDA $186.631M .

Management Tone/Confidence

“We believe that SPS’ leading retail network and competitive product portfolio position us well to consistently deliver on our target revenue growth and adjusted EBITDA profile, which remain unchanged.” — CFO Kim Nelson .
“We are uniquely positioned to support all trading relationships and continue growing our network” — CEO Chad Collins .

All citations: Q4 2024 8-K/press release [4:] [3:]; Q4 2024 call transcript [16:]; Q3 2024 PR/call [12:] [24:]; Q2 2024 PR/call [20:] [25:]; Carbon6 releases [9:] [5:*].

SPS COMMERCE INC (SPSC)·Q4 2024 Earnings Summary