Summary
SPS Commerce reported fiscal 2025 second quarter revenue of $187.4 million, up 22.0% from the prior-year quarter. Gross profit was $127.6 million, up 25.6%, operating income was $26.5 million, up 14.3%, net income was $19.7 million, up 9.4%, and diluted EPS was $0.52, up $0.04, all versus the prior-year quarter. For the first six months of fiscal 2025, revenue was $368.9 million, up 21.7%; gross profit was $252.2 million, up 26.3%; operating income was $52.4 million, up 35.9%; net income was $41.9 million, up 16.4%; and diluted EPS was $1.10, up $0.14, all versus the prior-year period.
Gross margin was 68.1% in the quarter, up 1.9 percentage points from 66.1% a year earlier. Operating margin slipped to 14.1%, down 1.0 percentage point from 15.1%. On a year-to-date basis, gross margin was 68.4%, up 2.5 percentage points, while operating margin was 14.2%, up 1.5 percentage points. Operating cash flow was $32.3 million for the quarter, up 9.8%, and $72.3 million for the first six months, up 13.9%. Capital expenditures were $6.7 million in the quarter, up 31.7%, and $12.8 million year to date, up 49.2%. Deferred revenue, current portion, was $79.2 million at June 30, 2025, up 3.7% from the prior-year quarter.
Recurring revenue increased 24% to $179.1 million in the quarter, accounting for 96% of total revenue. ARPU rose 3% to roughly $13,200 for the three months ended June 30, 2025. Recurring revenue customers grew 21% to about 54,500 at June 30, 2025. Of that total, about 46,300 are 1P recurring revenue customers. The Carbon6 acquisition added roughly 8,500 recurring revenue customers in February 2025, of which about 300 are 1P. Earlier deals added about 50 1P recurring revenue customers in May 2024 from Traverse Systems and about 200 1P recurring revenue customers in July 2024 from SupplyPike. The press release noted the 98th consecutive quarter of topline growth. Adjusted EBITDA rose 27% to $56.1 million, and non-GAAP income per diluted share was $1.00 compared with $0.80. Share repurchases totaled $20.0 million in the quarter.
Third quarter fiscal 2025 revenue is guided to $191.7 million to $193.2 million, representing 17% to 18% year-over-year growth. Third quarter net income per diluted share is expected to be $0.50 to $0.54, with 38.5 million fully diluted weighted average shares outstanding. Non-GAAP income per diluted share is guided to $0.96 to $1.00, and Adjusted EBITDA to $57.9 million to $59.9 million. Expected third quarter non-cash, share-based compensation expense is $16.0 million, depreciation is $5.6 million, and amortization is $9.5 million. For full fiscal year 2025, revenue is guided to $759.0 million to $763.0 million, representing 19% to 20% growth over 2024. Full-year net income per diluted share is expected to be $2.17 to $2.22, with 38.3 million fully diluted weighted average shares outstanding. Non-GAAP income per diluted share is guided to $3.99 to $4.04, and Adjusted EBITDA to $230.7 million to $233.7 million, representing 24% to 25% growth over 2024. Full-year expected non-cash, share-based compensation expense is $60.9 million, depreciation is $21.8 million, and amortization is $37.1 million.
The outlook depends on execution against a broad set of risks. The company cited risk factors in its Annual Report on Form 10-K for the year ended December 31, 2024, and said forward-looking measures involve known and unknown risks and uncertainties. MD&A lists future capital requirements that may vary based on costs to develop new products, sales and marketing resources, expansion in the U.S. and internationally, competitor response, and use of capital for acquisitions. Tax rate volatility is another factor, because excess tax benefits from equity award exercises and settlements can reduce income tax expense, and nondeductible compensation can affect the annual effective rate. Foreign currency exchange and inflation rate changes also remain part of the risk profile. Management expects expenditures to continue to increase as the business expands.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $187.4M | $181.5M | +3.2% | $153.6M | +22.0% |
| Gross profit | $127.6M | $124.6M | +2.4% | $101.6M | +25.6% |
| Gross margin | 68.1% | 68.7% | -0.6 pp | 66.1% | +2.0 pp |
| Research & development | $17.3M | $17.4M | -1.0% | $14.4M | +20.2% |
| Sales & marketing | $43.4M | $41.6M | +4.3% | $35.7M | +21.7% |
| General & administrative | $30.9M | $31.0M | -0.4% | $23.5M | +31.4% |
| Total operating expenses | $101.1M | $98.7M | +2.5% | $78.4M | +28.9% |
| Operating income (loss) | $26.5M | $26.0M | +2.0% | $23.2M | +14.3% |
| Operating margin | 14.1% | 14.3% | -0.2 pp | 15.1% | -1.0 pp |
| Net income (loss) | $19.7M | $22.2M | -11.1% | $18.0M | +9.4% |
| Net margin | 10.5% | 12.2% | -1.7 pp | 11.7% | -1.2 pp |
| Diluted EPS | $0.52 | $0.58 | -$0.06 | $0.48 | +$0.04 |
Risks
Customer growth is coming mostly from acquisitions of 3P marketplace-only connections that carry an inconsequential impact on recurring revenue. The February 2025 Carbon6 acquisition added approximately 8,500 recurring revenue customers, of which only about 300 are 1P, and overall recurring revenue customers rose 21% to approximately 54,500 at June 30, 2025 while quarterly ARPU rose only 3% to approximately $13,200.
Quarterly ARPU growth of 3% contrasts with six-month ARPU growth of 11% to approximately $14,100, and management attributes the drag to the addition of low-yield 3P customers. New recurring revenue customers do not contribute meaningfully at the start of their tenure, so a majority of the revenue increase came from existing customers.
Operating margin in the quarter fell to 14.1% from 15.1%, down 1.0 pp, even as year-to-date operating margin rose 1.5 pp to 14.2%. The quarterly pressure reflects general and administrative expense up 31% (including a $1.7 million increase in stock-based compensation) and amortization of intangible assets up 96% from acquired intangibles, plus headcount-driven personnel cost increases across cost of revenues, sales and marketing, and research and development.
Cash used in investing activities rose to $155.4 million for the six months ended June 30, 2025 from $11.9 million a year earlier, driven by a $113.3 million increase in cash used to acquire a business. Financing outflows also increased to $51.7 million from $30.0 million on a $22.1 million year-over-year increase in share repurchases, concentrating capital in acquisition and buyback programs.
Deferred revenue (current portion) rose only 3.7% year over year to $79.2 million at June 30, 2025, well below the 22.0% quarterly revenue increase, which may signal that billed-but-unrecognized backlog is growing more slowly than recognized revenue.
Management states that the annual effective income tax rate will fluctuate with excess tax benefits from equity award exercises and settlements and with nondeductible compensation. Income tax expense decreased 18% in the quarter but increased 39% year to date, driven by higher pre-tax income and reduced excess tax benefits.
Other income, net fell 81% in the quarter to $0.8 million and 59% year to date to $3.0 million, primarily on lower investment income, reducing the non-operating contribution to pre-tax results.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Adjusted EBITDA
Recurring Revenue Customers
Recurring Revenue
Recurring revenue as % of total revenue
1P Recurring Revenue Customers
Summary, forecast, risks and KPIs are extracted from SPS COMMERCE INC's SEC filings for Q2 FY2025 (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.