Summary
SPS Commerce closed fiscal 2022 with fourth quarter revenue of $122.0 million, up 18.7% from $102.8 million a year earlier. That extends the company's streak to 88 consecutive quarters of topline growth. Full year revenue reached $450.9 million, up 17.0% from $385.3 million in 2021. Recurring revenue, the core of the model, grew 20% in the quarter and 18% for the year, and accounted for 93% of total 2022 revenue against 92% in 2021.
Profitability scaled with revenue. Fourth quarter gross profit was $80.5 million, up 19.9%, and gross margin came to 66.0%, up 0.6 percentage points. Operating income rose 23.7% to $19.0 million, lifting operating margin to 15.6%, up 0.6 percentage points. Net income was $15.9 million, up 24.7%. For the full year, gross profit was $297.8 million, up 17.4%, with a gross margin of 66.1%, up 0.2 percentage points. Operating income for 2022 was $71.2 million, up 29.2%, and operating margin was 15.8%, up 1.5 percentage points. Full year net income was $55.1 million, up 23.6%, and diluted EPS was $1.49, up $0.28 or 23.1%.
Non-GAAP results moved faster than GAAP earnings. Non-GAAP income per diluted share was $0.63 in the fourth quarter against $0.46 a year earlier, and $2.35 for the year against $1.82. Adjusted EBITDA increased 26% to $35.0 million in the fourth quarter and 24% to $132.3 million for the year. Adjusted EBITDA margin was 29% for both the quarter and the year, against 27% and 28% respectively.
Cash generation lagged the income statement. Operating cash flow was $23.6 million in the fourth quarter, down 24.8% from $31.3 million a year earlier, and $100.1 million for the full year, down 11.4% from $112.9 million. Management tied the decline to the amount and timing of settlement of operating assets and liabilities, mainly accrued compensation. Capital expenditures were $6.0 million in the quarter, up 48.9%, and $19.9 million for the year, up 1.5%. Deferred revenue, current portion, ended the year at $57.4 million, up 13.9% from $50.4 million at December 31, 2021, which suggests billings and renewals held up through the period.
Customer metrics support the revenue base. The company ended 2022 with 42,300 recurring revenue customers, up 13% from 37,500 a year earlier, helped by new customer wins and recent acquisitions. Wallet share, or average recurring revenue per customer, rose 4% to $10,500 from $10,050, driven by heavier use of the products.
Guidance points to slower growth than 2022 delivered. For the first quarter of 2023, revenue is expected in a range of $123.3 million to $124.3 million, with non-GAAP income per diluted share of $0.56 to $0.57. Adjusted EBITDA for that quarter is guided to $35.0 million to $35.7 million. For the full fiscal year 2023, revenue is guided to $523.0 million to $526.0 million, which the company says represents 16% to 17% growth over 2022. Full year 2023 non-GAAP income per diluted share is guided to $2.63 to $2.69, and Adjusted EBITDA to $152.5 million to $154.5 million, representing 15% to 17% growth over 2022.
Risks are a familiar mix with a few company-specific items. The outlook depends on continued customer additions, wallet share gains, and the integration of recent acquisitions, which also drove up amortization of intangible assets. Spending rose across cost of revenues and every operating expense line on higher headcount, while general and administrative costs included more professional fees and software subscriptions, partly offset by lower bad debt expense. Management expects the annual effective income tax rate to fluctuate with equity award settlement activity. The company also does not reconcile forward-looking non-GAAP measures, including Adjusted EBITDA and non-GAAP income per share, to the closest GAAP measures, citing the difficulty of forecasting the excluded items without unreasonable effort.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $122.0M | $114.5M | +6.6% | $102.8M | +18.7% |
| Gross profit | $80.5M | $75.9M | +6.1% | $67.1M | +19.9% |
| Gross margin | 66.0% | 66.3% | -0.3 pp | 65.3% | +0.6 pp |
| Research & development | $12.5M | $11.1M | +12.1% | $10.6M | +18.0% |
| Sales & marketing | $27.2M | $25.3M | +7.4% | $22.7M | +20.1% |
| General & administrative | $17.9M | $16.7M | +7.3% | $16.1M | +11.4% |
| Total operating expenses | $61.5M | $56.2M | +9.4% | $51.7M | +18.8% |
| Operating income (loss) | $19.0M | $19.7M | -3.4% | $15.4M | +23.7% |
| Operating margin | 15.6% | 17.2% | -1.6 pp | 15.0% | +0.6 pp |
| Net income (loss) | $15.9M | $15.9M | +0.3% | $12.8M | +24.7% |
| Net margin | 13.0% | 13.9% | -0.8 pp | 12.4% | +0.6 pp |
| Diluted EPS | $0.43 | $0.43 | ±$0.00 | $0.35 | +$0.08 |
| Customers | 42,300 | — | — | 37,500 | +12.8% |
Risks
Most recurring revenue contracts allow cancellation for any reason with 30 to 90 days' notice, and recurring revenues were 93% of total revenues in 2022, so failure to maintain renewal rates could reduce revenue quickly.
A significant international workforce in Ukraine and the Philippines exposes operations to Russian interference and civil unrest, which could disrupt programming deliverables and services or require costly transition to alternative locations.
The company believes it is an attractive target because of its significant presence in the retail supply chain and past cyber-attacks on its system, and a breach could cause service disruptions, customer loss, litigation, and growing security costs.
Recent acquisitions increased recurring revenue customers and intangible assets, but integration risks include failing to assimilate operations and personnel, incurring higher costs, and future impairment charges on goodwill and intangibles.
Revenue depends on general economic conditions and retail spending, and economic weakness or uncertainty could lengthen sales cycles and make operating results harder to forecast for a company serving retailers, grocers, distributors, suppliers, and logistics firms.
The supply chain management market is highly fragmented and increasingly competitive, with consolidation or new alliances potentially leading to pricing pressure, loss of customers, and loss of market share.
Future success depends on attracting and retaining key executive, managerial, technology, and sales personnel, and rapid headcount growth may strain management and infrastructure if the company cannot hire, train, and manage employees effectively.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Adjusted EBITDA
Recurring Revenue Customers
Wallet Share
Recurring Revenue Growth
Summary, forecast, risks and KPIs are extracted from SPS COMMERCE INC's SEC filings for Q4 FY2022 (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.