SPS COMMERCE INC Q1 FY2026 earnings

SPS Commerce reported first quarter 2026 revenue of $192.1 million, up 5.8% from the prior-year quarter, with recurring revenue growing 7%. Gross profit rose to $132.9 million, up 6.6%, and gross margin reached 69.2%, up 0.5 percentage points. Operating income moved the other way, falling to $24.6 million, down 5.4%. Operating margin was 12.8%, down 1.5 percentage points. Gross margin expansion alongside operating margin contraction is the central tension in the quarter.

Net income was $19.7 million, down 11.1%, and diluted EPS was $0.53, down 8.6%. On a non-GAAP basis, income per diluted share was $1.10, compared with $1.00 in the first quarter of 2025. Adjusted EBITDA increased 7% to $57.9 million, and Adjusted EBITDA margin was 30%, flat with the prior-year quarter. Cash generation stood out. Operating cash flow was $55.6 million, up 39.1%, and capital expenditures were $7.1 million, up 16.1%. Deferred revenue, current portion, was $80.4 million, up 2.2%.

The operating story centers on cross-selling across the existing customer base and the launch of MAX, a set of AI capabilities embedded in existing supply chain workflows and powered by proprietary network data. CEO Chad Collins attributed the quarter to growth in the core business and cross-sell momentum. CFO Joe Del Preto pointed to margin expansion through operating leverage and AI-driven efficiencies. SPS Commerce serves more than 50,000 recurring revenue customers in retail, grocery, distribution, supply, manufacturing and logistics. Share repurchases in the quarter totaled $47.1 million. The 10-Q states there are no off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt.

Guidance for the second quarter of 2026 points to revenue growth of 4% to 5% year over year. Non-GAAP income per diluted share is expected to be in the range of $1.06 to $1.09, and Adjusted EBITDA is expected to be in the range of $60.9 million to $62.4 million. The outlook assumes 37.3 million fully diluted weighted average shares outstanding, non-cash share-based compensation expense of $19.0 million, depreciation expense of $5.2 million and amortization expense of $9.4 million.

For the full fiscal year 2026, revenue growth is expected to be 6% to 7% over 2025. Non-GAAP income per diluted share is expected to be in the range of $4.73 to $4.76. Adjusted EBITDA is expected to be in the range of $262.8 million to $267.3 million, which the company frames as 14% to 16% growth over 2025. The full-year plan assumes share-based compensation expense of $69.8 million, depreciation expense of $23.0 million and amortization expense of $37.4 million, with 37.3 million fully diluted weighted average shares outstanding.

The release and the 10-Q carry standard cautionary language about known and unknown risks and uncertainties that could cause actual results to vary materially. The company does not reconcile forward-looking non-GAAP measures such as Adjusted EBITDA, Adjusted EBITDA margin and non-GAAP income per share to the most directly comparable GAAP measures, saying it is impractical to forecast certain items without unreasonable efforts. The 10-Q directs readers to the risk factors in the annual report for the year ended December 31, 2025 and to later filings. Management has tied its margin story to operating leverage and AI-driven efficiencies. If operating margin pressure persists, that promise carries more weight than the top-line growth.