Summary
SPS Commerce closed fiscal 2025 with fourth-quarter revenue of $192.7 million, up 12.7% from the prior-year quarter. That marked the 100th consecutive quarter of revenue growth. Recurring revenue grew 14% year over year in the quarter. Full-year revenue reached $751.5 million, up 17.8%. The top line benefited from a 20% increase in recurring revenue customers and an 8% rise in ARPU to approximately $14,350. The company ended the year with approximately 54,600 recurring revenue customers, including about 46,900 1P customers. The February 2025 Carbon6 acquisition added roughly 8,500 recurring revenue customers, mostly 3P. The company also added about 50 1P customers in May 2024 from Traverse Systems and about 200 1P customers in July 2024 from SupplyPike. Full-year recurring revenue rose 20% to $718.0 million and accounted for 96% of total revenue.
Profitability improved sharply. Fourth-quarter gross profit rose 17.7% to $135.7 million, and gross margin expanded 3.0 percentage points to 70.4%. Operating income climbed 40.2% to $34.7 million, lifting operating margin by 3.5 percentage points to 18.0%. Net income increased 47.2% to $25.8 million. On a non-GAAP basis, fourth-quarter Adjusted EBITDA rose 22% to $60.5 million, and non-GAAP income per diluted share was $1.14, compared with $0.89 in the prior-year quarter. For the full year, gross profit was $519.9 million, up 21.7%, and gross margin was 69.2%, up 2.2 percentage points. Full-year operating income was $118.3 million, up 33.1%, with operating margin of 15.7%, up 1.8 percentage points. Full-year net income was $93.3 million, up 21.1%, and diluted EPS was $2.46, up 20.6%. Full-year Adjusted EBITDA increased 24% to $231.4 million.
Cash generation remained solid. Fourth-quarter operating cash flow rose 13.1% to $45.9 million. Full-year operating cash flow was $178.8 million, up 13.6%. Capital expenditures increased 23.1% to $7.7 million in the quarter and 32.3% to $26.5 million for the year. Deferred revenue, current portion, stood at $75.6 million at December 31, 2025, up 1.8% from a year earlier. SPS repurchased $25.0 million of stock in the fourth quarter and $115.0 million for the full year. The board added $200.0 million to the repurchase program, bringing total authorization to $300.0 million. The program expires on December 1, 2027.
Management guided first-quarter 2026 revenue growth of 6% to 7% year over year. Non-GAAP income per diluted share is expected between $0.95 and $0.99, and Adjusted EBITDA is projected at $55.5 million to $57.5 million. For full-year 2026, revenue growth is guided to 6% to 7%, non-GAAP income per diluted share to $4.42 to $4.50, and Adjusted EBITDA to $261.0 million to $265.5 million, representing 13% to 15% growth. The guidance excludes a reconciliation to GAAP because the company cannot forecast certain items without unreasonable efforts. SPS also announced that CFO Kim Nelson will retire and Joseph Del Preto will become Executive Vice President and Chief Financial Officer on March 16, 2026.
Risks include the usual forward-looking uncertainties. The company flagged known and unknown risks that could cause actual results to differ materially from guidance. Its 10-K notes risks tied to acquisition integration, foreign currency exchange, inflation, the response of competitors to its products, and the need to expand distribution channels and international presence. The SPS model depends on continued recurring revenue growth and customer retention. The recent acquisitions added many 3P customers with lower ARPU, which could pressure average revenue per user. The CFO transition introduces execution risk during the integration of recent deals. Management believes cash, cash equivalents, and cash flows from operations will be sufficient to meet working capital and capital expenditure requirements for at least the next twelve months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $192.7M | $189.9M | +1.4% | $170.9M | +12.7% |
| Gross profit | $135.7M | $132.0M | +2.8% | $115.3M | +17.7% |
| Gross margin | 70.4% | 69.5% | +1.0 pp | 67.5% | +3.0 pp |
| Research & development | $16.7M | $17.3M | -3.4% | $17.1M | -2.6% |
| Sales & marketing | $41.7M | $42.3M | -1.4% | $39.2M | +6.4% |
| General & administrative | $33.0M | $31.7M | +4.1% | $26.4M | +25.2% |
| Total operating expenses | $101.0M | $100.8M | +0.2% | $90.6M | +11.5% |
| Operating income (loss) | $34.7M | $31.2M | +11.2% | $24.7M | +40.2% |
| Operating margin | 18.0% | 16.4% | +1.6 pp | 14.5% | +3.5 pp |
| Net income (loss) | $25.8M | $25.6M | +1.1% | $17.6M | +47.2% |
| Net margin | 13.4% | 13.5% | -0.1 pp | 10.3% | +3.1 pp |
| Diluted EPS | $0.68 | $0.67 | +$0.01 | $0.46 | +$0.22 |
Risks
The company incorporates AI/ML into internal operations and products and may expand such use. Failure to develop, deploy, or integrate AI/ML in a timely, effective, and cost-efficient manner could cause it to fall behind competitors, lose competitive efficiencies, reduce innovation, and lose market share, while evolving AI/ML regulation may increase liability and compliance costs.
AI/ML-enabled products, third-party AI/ML technologies, and increased AI-driven attacks create additional cybersecurity risks, including hallucinations, data leakage, prompt injections, data poisoning, model exploitation, ransomware, and phishing. Security incidents could compromise data confidentiality, integrity, and availability and harm reputation or expose the company to liability.
Economic weakness and uncertainty, including tariffs, could reduce retail spending, delay technology purchases, lengthen sales cycles, and make forecasting operating results more difficult. The company has experienced reduced spending in the past due to financial turmoil affecting the U.S. and global economy.
The company has a significant international workforce in Ukraine and the Philippines, where Russian interference and civil unrest could disrupt operations, cause programming delays and shortfalls, and require a transition to more expensive alternative workforce locations.
Recent acquisitions, including Carbon6 in February 2025 which added approximately 8,500 recurring revenue customers, as well as SupplyPike and Traverse Systems in 2024, carry integration risks, potential goodwill impairment, and failure to achieve anticipated synergies. Acquisitions have increased intangible amortization and general and administrative costs for integration.
Most recurring revenue contracts allow customers to cancel for any reason with 30 to 90 days' notice, so the company depends on meeting or exceeding customer expectations. A significant number of terminations could adversely affect revenue and financial condition in a short period.
Rapid growth in headcount and operations strains management, administrative, operational, and financial resources. The company must hire, train, and retain key executive, managerial, technology, and sales personnel amid intense competition, and loss of key personnel could delay or prevent business objectives.
The company implemented new enterprise resource planning systems to replace legacy systems used for transaction processing and financial reporting. The transition required significant changes to internal controls, and implementation challenges could heighten the risk of material misstatement.
Privacy concerns and evolving regulation of the internet and cloud computing, including the GDPR and cross-border data transfer restrictions, may limit the use and adoption of products, reduce demand, and increase compliance costs. Industry-specific cloud regulations may also apply directly to the company as a service provider.
The company relies on third-party data centers, cloud providers, and licensed infrastructure, software, and services. Loss of rights or service interruptions from fire, flood, power loss, cyberattacks, or provider financial failure could disrupt delivery and require costly transitions.
The markets for supply chain management products are increasingly competitive and global. Competitors may consolidate, form alliances, or new entrants with greater financial, technical, marketing, and service resources may emerge, leading to pricing pressure, loss of customers, and reduced operating margins.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Adjusted EBITDA
Recurring Revenue Customers
Non-GAAP Income Per Diluted Share
Recurring Revenue Growth
1P Recurring Revenue Customers
Summary, forecast, risks and KPIs are extracted from SPS COMMERCE INC's SEC filings for Q4 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.