SPSC — SPS Commerce, Inc.

Summary of SPS Commerce, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: $192.1 million, up 6% year-over-year.
• Recurring Revenue: Grew 7%, with Fulfillment revenue increasing by 8%.
• Adjusted EBITDA: $57.9 million.
• Total Recurring Revenue Customers: Approximately 54,200.
• Average Revenue Per User (ARPU): Approximately $13,550.
• Cash and Cash Equivalents: $154 million.
• Share Repurchase: $47.1 million of shares repurchased in Q1.

2. Strategic Updates and Business Highlights:

• The company is focusing on AI-enabled solutions to enhance supply chain efficiency amidst global disruptions.
• Introduction of a subscription platform fee for 3P take-rate customers to better align pricing with service value, expected to lead to churn of approximately 4,000 customers.
• Positive cross-selling momentum observed, particularly between 1P and 3P customers.
• Successful case studies highlighted, such as Siete Foods and Explore Scientific, showcasing the value of SPS Commerce's solutions in improving operational efficiency and revenue recovery.
• The MAX program, an AI agent, is in beta with 400 customers, showing promising results in diagnosing supply chain issues and improving operational patterns.

3. Forward Guidance and Outlook:

• Q2 2026 Revenue Guidance: Expected to be between $194.5 million and $196.5 million (approximately 4% year-over-year growth at midpoint).
• Full-Year 2026 Revenue Guidance: Anticipated between $796 million and $802 million (approximately 6% growth over 2025).
• Adjusted EBITDA for Full Year: Expected between $262.8 million and $267.3 million (14% to 16% growth over 2025).
• Earnings Per Share Guidance: Fully diluted EPS expected between $0.53 to $0.56 for Q2 and $2.66 to $2.69 for the full year.

4. Bad News, Challenges, or Points of Concern:

• Continued headwinds in the Amazon revenue recovery segment due to policy changes, which are expected to negatively impact growth in 2026.
• Anticipated churn of up to 4,000 3P customers due to the introduction of the subscription fee, although this is not expected to materially impact overall revenue.
• The number of 3P customers declined by 400 in Q1, and the company noted that the Amazon portion of revenue recovery is on a negative trajectory.
• The overall growth rate for Q2 is projected at 4% to 5%, lower than historical high single-digit growth expectations, primarily due to Amazon-related headwinds.

5. Notable Q&A Insights:

• Management indicated that the Amazon revenue recovery business is expected to trough by mid to late 2026, with potential for improvement in 2027.
• The company is cautiously optimistic about the dissipating contract scrutiny from tariffs, which had previously impacted customer renewals.
• MAX's beta feedback is strong, with customers reporting significant operational improvements and ROI.
• The management remains focused on maintaining a disciplined approach to capital allocation, with share repurchases prioritized over acquisitions for the time being.
• There is a belief that the core business, excluding Amazon, is growing at a healthy rate and could see further acceleration as the year progresses, particularly in the second half of 2026.