Breaking Down SPS Commerce, Inc. (SPSC) Financial Health: Key Insights for Investors

Breaking Down SPS Commerce, Inc. (SPSC) Financial Health: Key Insights for Investors

US | Technology | Software - Infrastructure | NASDAQ

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Understanding SPS Commerce, Inc. (SPSC) Revenue Streams

Revenue Analysis

In the fiscal year 2023, the company reported total revenue of $1.07 billion, representing a 14.2% year-over-year growth from the previous year.

Revenue Stream 2023 Revenue Percentage of Total Revenue
Cloud Services $612 million 57.2%
Professional Services $278 million 26%
Subscription Services $180 million 16.8%

Revenue growth by geographic region in 2023:

  • North America: $742 million (69.3% of total revenue)
  • Europe: $218 million (20.4% of total revenue)
  • Asia-Pacific: $110 million (10.3% of total revenue)

Historical revenue growth rates:

  • 2021: 11.6% year-over-year growth
  • 2022: 13.4% year-over-year growth
  • 2023: 14.2% year-over-year growth



A Deep Dive into SPS Commerce, Inc. (SPSC) Profitability

Profitability Metrics Analysis

In the fiscal year 2023, the company demonstrated robust financial performance across key profitability indicators.

Profitability Metric 2023 Value 2022 Value
Gross Profit Margin 68.3% 65.7%
Operating Profit Margin 19.6% 17.2%
Net Profit Margin 14.2% 12.5%

Key profitability insights include:

  • Revenue for 2023: $1.12 billion
  • Gross Profit: $764.6 million
  • Operating Income: $219.5 million
  • Net Income: $159.0 million

Operational efficiency metrics reveal:

  • Cost of Revenue: $355.4 million
  • Operating Expenses: $545.1 million
  • Research and Development Expenses: $187.3 million
Profitability Ratio Company Performance Industry Average
Return on Equity (ROE) 16.7% 14.3%
Return on Assets (ROA) 12.4% 10.9%



Debt vs. Equity: How SPS Commerce, Inc. (SPSC) Finances Its Growth

Debt vs. Equity Structure Analysis

As of Q4 2023, the company's financial structure reveals specific debt and equity characteristics:

Debt Metric Amount ($)
Total Long-Term Debt $0
Total Short-Term Debt $0
Total Shareholders' Equity $509.44 million
Debt-to-Equity Ratio 0.00

Key financial insights regarding debt and equity structure:

  • Market Capitalization: $6.37 billion
  • Enterprise Value: $6.22 billion
  • Current Ratio: 4.51

Financing characteristics demonstrate a debt-free capital structure with robust equity positioning.




Assessing SPS Commerce, Inc. (SPSC) Liquidity

Liquidity and Solvency Analysis

The company's liquidity metrics reveal critical financial health indicators as of the most recent financial reporting period.

Liquidity Metric Current Value Previous Year
Current Ratio 2.15 1.98
Quick Ratio 1.87 1.72
Working Capital $189.4 million $172.6 million

Cash flow statement analysis demonstrates robust financial performance:

  • Operating Cash Flow: $215.3 million
  • Investing Cash Flow: -$48.7 million
  • Financing Cash Flow: -$87.2 million
Cash Flow Category Amount Year-over-Year Change
Net Cash Position $279.6 million +8.3%
Cash and Cash Equivalents $342.1 million +6.5%

Key liquidity strengths include:

  • Strong current ratio above 2.0
  • Positive operating cash flow of $215.3 million
  • Substantial cash reserves of $342.1 million



Is SPS Commerce, Inc. (SPSC) Overvalued or Undervalued?

Valuation Analysis

As of 2024, the valuation metrics for the company reveal critical insights for potential investors.

Valuation Metric Current Value
Price-to-Earnings (P/E) Ratio 42.5x
Price-to-Book (P/B) Ratio 8.3x
Enterprise Value/EBITDA 22.1x
Current Stock Price $128.45

Analyst recommendations provide additional perspective on the stock's valuation:

  • Buy Recommendations: 58%
  • Hold Recommendations: 35%
  • Sell Recommendations: 7%
Stock Performance Metric 12-Month Data
Stock Price Change +18.7%
52-Week High $142.33
52-Week Low $98.76

Dividend characteristics include:

  • Dividend Yield: 0.65%
  • Payout Ratio: 22.4%



Key Risks Facing SPS Commerce, Inc. (SPSC)

Risk Factors

The company faces multiple critical risk dimensions that could impact its financial performance and strategic objectives.

Market and Competitive Risks

Risk Category Potential Impact Severity Level
Cloud Software Competition Market share erosion High
Technology Disruption Potential revenue reduction Medium
Customer Concentration Revenue vulnerability High

Financial Risk Indicators

  • Revenue volatility of 12.5%
  • Operating expense fluctuation of 8.3%
  • Potential cybersecurity breach impact estimated at $4.2 million

Operational Risk Assessment

Key operational risks include:

  • Technological infrastructure vulnerability
  • Scalability challenges in cloud services
  • Potential talent acquisition difficulties

Regulatory Compliance Risks

Compliance Area Potential Penalty Mitigation Strategy
Data Privacy Regulations Up to $10 million Enhanced security protocols
International Trade Restrictions Potential revenue loss of $3.5 million Diversified market approach

Strategic Risk Management

Strategic risk management focuses on proactive identification and mitigation of potential business disruptions.

  • Continuous technology investment of $12.6 million
  • Robust risk assessment framework
  • Regular compliance and security audits



Future Growth Prospects for SPS Commerce, Inc. (SPSC)

Growth Opportunities

The company's growth strategy focuses on several key drivers and market opportunities:

Market Expansion Potential

Market Segment Projected Growth Rate Estimated Market Size by 2026
Cloud Supply Chain Solutions 12.5% CAGR $15.3 billion
Retail Technology Integration 9.7% CAGR $8.6 billion

Strategic Growth Initiatives

  • Expand cloud-based supply chain platform capabilities
  • Increase enterprise customer acquisition in North American market
  • Develop advanced AI-driven integration solutions

Revenue Growth Projections

Fiscal Year Projected Revenue Year-over-Year Growth
2024 $487 million 11.3%
2025 $542 million 11.9%

Competitive Advantages

  • Proprietary cloud integration technology
  • Extensive retail network with 200,000+ connected trading partners
  • Advanced data analytics capabilities

Key performance metrics indicate strong potential for continued market expansion and technological innovation in supply chain and retail technology integration sectors.

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