SPS Commerce (NASDAQ:SPSC), a leading provider of cloud-based supply chain management solutions, reported an 18% increase in total revenue for Q3 2023, reaching $135.7 million, according to the company's recent earnings call. The company also announced the retirement of CEO Archie Black, with Chad Collins succeeding him from October 2nd.
Key takeaways from the call include:
- Recurring revenue grew 20% YoY, with the total number of recurring revenue customers increasing 13% to approximately 44,500.
- Adjusted EBITDA for the quarter was $40.5 million, a 17% increase from Q3 2022, contributing to a total EBITDA of $106.73 million in the last 12 months (LTM2023.Q3) according to InvestingPro data.
- The company completed the acquisitions of TIE Kinetix and The Order Exchange, enhancing its e-invoicing capability and expanding its European and Australian operations.
- SPS Commerce expects Q4 2023 revenue to be in the range of $142.2 million to $143.2 million, representing approximately 17% YoY growth. This aligns with the company's accelerating revenue growth, as indicated by one of the InvestingPro Tips.
- The company maintains a long-term target model for an adjusted EBITDA margin of 35%.
- The acquisition of TIE Kinetix is expected to be breakeven in EBITDA by 2024.
During the call, SPS Commerce emphasized its focus on capitalizing on market dynamics and supporting future growth. Chad Collins, the incoming CEO, underscored the potential for international expansion, particularly in Europe, facilitated by the acquisition of TIE Kinetix. The company also discussed their product roadmap and the opportunities for growth in supply chain technologies.
Archie Black, the outgoing CEO, highlighted the company's efforts in displacing paper and fax in the retail industry, a trend set to continue as more suppliers automate their supply chains. He also mentioned the recent acquisition of Order Exchange, a small company specializing in integrating long-tail ERP systems. This acquisition responds to strong demand for ERP implementation in the small and mid-market sectors, driven by the need to meet customer demands.
Despite acknowledging uncertainty in the retail landscape heading into the holiday season, SPS expressed confidence in its omni-channel approach's adaptability to changing dynamics. The company expects both net customer adds and wallet share to contribute to their overall growth, with community enablement campaigns remaining a significant driver of net customer adds.
In terms of financials, the company noted a slight downtick in implied operating margins for Q4, primarily due to acquisition-related impacts. Yet, SPS remains optimistic about their growth opportunities and their ability to deliver sustained profitable growth, aligning with the InvestingPro Tip that the company has been consistently increasing its earnings per share.
Archie Black expressed his gratitude to the management team, customers, and employees for their support throughout his 22-year tenure at the company, and wished the new leadership continued success. The company's strong financial standing, as indicated by the InvestingPro data, with a market cap of $5.69 billion and a 19.08% revenue growth, certainly sets a solid foundation for the new leadership to build upon. For more insights like these, consider exploring the InvestingPro product that includes additional tips.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.