Summary
SPS Commerce reported its 93rd consecutive quarter of revenue growth in the first quarter of fiscal 2024. Revenue reached $149.6 million, up 18.8% from $125.9 million in the prior-year quarter. Net income rose 17.8% to $18.0 million, and diluted EPS came in at $0.48 against $0.41 a year earlier. Recurring revenue was $139.7 million, up 19%, and accounted for 93% of total revenue. The press release notes that more than 120,000 companies in retail, grocery, distribution, supply and logistics have chosen SPS as their retail network.
Profitability below the top line is less tidy. Gross profit of $98.1 million was up 18.3%, but gross margin slipped to 65.6% from 65.9%. More important, operating income fell 7.9% to $15.4 million and operating margin dropped 3.0 percentage points to 10.3% from 13.3%. Operating expenses grew faster than revenue, and management attributed the increases in sales and marketing, research and development, and general and administrative spend to higher headcount and stock-based compensation. Net income still advanced, helped by lower income tax expense that the company tied to excess tax benefits on equity award settlements and higher deductible compensation. The full-service model, which pairs software with a team that operates it for customers, means headcount growth flows straight into the cost base.
The demand-side metrics look solid. Recurring revenue customers totaled roughly 44,800 at March 31, 2024, up 5% from roughly 42,750, and wallet share rose 13% to about $12,450 from about $11,050. Roughly 1,000 customers joined through the TIE Kinetix customer base acquired in September 2023, so part of the customer count increase is inorganic. Deferred revenue of $73.7 million rose 17.2% from $62.9 million, a reasonable read on billing momentum.
Cash generation was the standout. Operating cash flow was $34.06 million, up 57.5% from $21.63 million. Capital expenditures fell 32.8% to $3.53 million from $5.26 million, a rare combination of lower spend and stronger cash collections. Share repurchases totaled $20 million in the quarter, and cash, cash equivalents and short-term investments stood at $290.8 million against net accounts receivable of $52.1 million.
Guidance covers both periods. For the second quarter of fiscal 2024, revenue is expected in the range of $150.9 million to $151.7 million, non-GAAP income per diluted share in the range of $0.75 to $0.76, and adjusted EBITDA in the range of $43.4 million to $44.1 million. For the full fiscal year 2024, revenue is expected in the range of $619.9 million to $621.9 million, growth of 15% to 16% over 2023, non-GAAP income per diluted share in the range of $3.28 to $3.32, and adjusted EBITDA in the range of $185.1 million to $186.7 million, growth of 17% to 18% over 2023. The second quarter revenue range sits only slightly above the revenue just reported, and second quarter adjusted EBITDA is guided below the $44.4 million delivered this quarter.
The gap between GAAP and adjusted results deserves attention. Adjusted EBITDA of $44.4 million rose 20% year over year, and adjusted EBITDA margin was 30% against 29%, but those figures rest on heavy add-backs, with stock-based compensation the largest of them. Non-GAAP income per diluted share of $0.86 compared with $0.67 a year earlier, against diluted EPS of $0.48. On risk, the company points readers to the risk factors in its Form 10-K for the year ended December 31, 2023 and later filings, and it warns that the effective income tax rate will fluctuate with equity award activity. Contractual obligations total $45.5 million, including $31.7 million of purchase commitments.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $149.6M | $145.0M | +3.2% | $125.9M | +18.8% |
| Gross profit | $98.1M | $95.9M | +2.3% | $82.9M | +18.3% |
| Gross margin | 65.6% | 66.2% | -0.6 pp | 65.9% | -0.3 pp |
| Research & development | $16.0M | $14.2M | +12.6% | $12.6M | +27.4% |
| Sales & marketing | $36.4M | $33.2M | +9.7% | $29.1M | +25.3% |
| General & administrative | $25.9M | $20.6M | +25.7% | $20.7M | +25.3% |
| Total operating expenses | $82.7M | $73.0M | +13.2% | $66.2M | +25.0% |
| Operating income (loss) | $15.4M | $22.9M | -32.7% | $16.7M | -7.9% |
| Operating margin | 10.3% | 15.8% | -5.5 pp | 13.3% | -3.0 pp |
| Net income (loss) | $18.0M | $19.0M | -5.3% | $15.3M | +17.8% |
| Net margin | 12.0% | 13.1% | -1.1 pp | 12.2% | -0.1 pp |
| Diluted EPS | $0.48 | $0.51 | -$0.03 | $0.41 | +$0.07 |
| Customers | 1,000 | 44,800 | -97.8% | 115,000 | -99.1% |
Risks
Revenue rose 18.8% to $149.6M in FY2024 Q1, but operating income fell 7.9% to $15.4M and operating margin narrowed to 10.3% from 13.3% (down 3.0 pp) as total operating expenses climbed 25%, with sales and marketing, research and development and general and administrative each up 25%. Cost growth is currently outpacing revenue growth.
Stock-based compensation expense rose to $20.0M in FY2024 Q1 from $11.8M in the prior-year quarter, embedded across cost of revenues and every operating expense line, and is the largest single reconciling item between net income of $18.0M and Adjusted EBITDA of $44.4M. Continued reliance on equity compensation weighs on GAAP profitability.
Management attributes part of the increase in recurring revenue customers (up 5% to approximately 44,800 at March 31, 2024) and of the revenue increase to recent acquisitions, including approximately 1,000 customers added in September 2023 from the TIE Kinetix customer base. Growth plans include selective pursuit of acquisitions, exposing results to integration and diligence risk.
Management states that a majority of the increased revenue was generated from existing customers and that wallet share rose 13% to approximately $12,450 for the three months ended March 31, 2024. Revenue growth is therefore concentrated in expanding spend at existing recurring revenue customers rather than new customer additions.
Cash used in financing activities increased in FY2024 Q1, primarily from an increase in cash used for share repurchases of $16.5 million year over year, while purchase commitments total $31.7M and operating lease obligations $13.7M. Management continues to direct capital to buybacks alongside stated acquisition ambitions.
Income tax expense fell 80% to $0.5M in FY2024 Q1, driven by excess tax benefits from equity award settlements and higher deductible compensation, and management expects the annual effective income tax rate to fluctuate, which may make net income and diluted EPS comparisons across periods less predictable.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Adjusted EBITDA
Recurring Revenue Customers
Wallet Share
Recurring Revenue
Non-GAAP Income Per Diluted Share
Recurring revenue as % of total revenue
Summary, forecast, risks and KPIs are extracted from SPS COMMERCE INC's SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.