SPS Commerce nine-month profit falls 15% to $57.3M
Nine-month operating cash flow was $185.664 million, while the 3P business sale resulted in a $23.454 million loss.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
SPS Commerce (SPSC) reported third-quarter revenue of $197.647 million versus $189.904 million a year earlier, and net income of $30.683 million versus $25.569 million. Adjusted EBITDA was $70.868 million, compared with $60.480 million.
For the nine months ended September 30, 2026, revenue increased 5% to $587.583 million, while net income fell 15% to $57.276 million and operating income declined to $72.901 million from $83.617 million. Operating income included a $23.454 million loss on the June 30, 2026 sale of the third-party revenue recovery business; SPS received $8.8 million cash, net of cash transferred. The divested business was immaterial to consolidated operations and financial position, and the sale is not expected to materially affect future results, financial position or cash flows.
Operating cash flow was $185.664 million, versus $132.919 million. SPS repurchased 2,348,031 shares for $149.887 million; $136.38 million remained available under the 2025 Program as of September 30, 2026. A useful-life revision for certain acquired technology and related internally developed software increased quarterly amortization by $1.3 million and reduced net income by $0.9 million, or $0.03 per share; SPS expects increases of approximately $4.0 million in the fourth quarter of 2026 and $6.9 million in 2027.
2 points · 0 major0 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue rose 5% to $587.583 million.
- Moderate pointOperating cash flow reached $185.664 million, versus $132.919 million.
Negative
- Moderate pointNine-month net income fell 15% to $57.276 million.
- Moderate pointThe divestiture included a $23.454 million loss in operating income.
Filing Explained
SPS expects acquired technology to leave use by mid-2027 as revenue-recovery offerings consolidate onto one platform.
At
The company ties the revised useful life of acquired technology to its planned consolidation of revenue-recovery offerings onto one platform and expects the technology to stop being used by mid-2027; the estimate change took effect on
Key Figures
Third-quarter revenue: $197.647 million
Third-quarter net income: $30.683 million
Nine-month revenue: $587.583 million
+5 more
8 metrics
Third-quarter revenue
$197.647 million
Three months ended September 30, 2026; $189.904 million in 2025
Third-quarter net income
$30.683 million
Three months ended September 30, 2026; $25.569 million in 2025
Nine-month revenue
$587.583 million
Nine months ended September 30, 2026; $558.853 million in 2025
Nine-month net income
$57.276 million
Nine months ended September 30, 2026; $67.498 million in 2025
Operating cash flow
$185.664 million
Nine months ended September 30, 2026; $132.919 million in 2025
Adjusted EBITDA
$70.868 million
Three months ended September 30, 2026; $60.480 million in 2025
Loss on sale of business
$23.454 million
Nine months ended September 30, 2026
Shares repurchased
2,348,031 shares
Nine months ended September 30, 2026
Key Terms
Adjusted EBITDA Margin, Annual Revenue Per User, material right, deferred revenue, +1 more
5 terms
Adjusted EBITDA Margin financial
"Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue."
Adjusted EBITDA margin shows how much profit a company makes from its core operations, expressed as a percentage of its total revenue, after removing certain one-time or unusual expenses and income. It helps investors understand the company's true earning ability from regular business activities, making it easier to compare performance over time or with other companies. Think of it as measuring the efficiency of a business in turning sales into profits, excluding irregular adjustments.
Annual Revenue Per User financial
"Annual Revenue Per User"
material right financial
"Set-up fees constitute a material right"
deferred revenue financial
"The table below presents the activity of the portion of the deferred revenue liability"
Cash a company has already received for goods or services it has promised but not yet delivered; it's recorded as a liability because the company still owes that product, service, or future revenue recognition. For investors, deferred revenue signals upcoming work or deliveries that will convert into reported sales over time and affects short-term obligations, cash flow quality, and how quickly a firm can grow recognized revenue—think of it like prepaid subscriptions or gift cards a business must honor later.
weighted average remaining contractual life financial
"weighted average remaining contractual life of 2.5 years"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How many recurring revenue customers did SPS Commerce have at September 30, 2026?
SPS Commerce had approximately 46,700 recurring revenue customers at September 30, 2026, down 15%. The decrease reflected the divestiture of its 3P revenue recovery business, which reduced the count by approximately 8,050 3P recurring revenue customers; all recurring revenue customers were 1P as of June 30, 2026.
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the Quarterly Period Ended: September 30, 2026
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the Transition Period from ________ to ________
Commission file number 001-34702
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices, including Zip Code)
(612 ) 435-9400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of exchange on which registered | ||||||||||||
The | ||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated Filer | o | |||||||||
| Non-accelerated filer | o | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding at October 22, 2026 was 35,440,926 shares.
Table of Contents
SPS COMMERCE, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
| Page | ||||||||
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements (unaudited) | 3 | ||||||
Condensed Consolidated Balance Sheets | 3 | |||||||
Condensed Consolidated Statements of Comprehensive Income | 4 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity | 5 | |||||||
Condensed Consolidated Statements of Cash Flows | 7 | |||||||
Notes to Condensed Consolidated Financial Statements | 8 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31 | ||||||
Item 4. | Controls and Procedures | 32 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 33 | ||||||
Item 1A. | Risk Factors | 33 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 | ||||||
Item 3. | Defaults Upon Senior Securities | 33 | ||||||
Item 4. | Mine Safety Disclosures | 33 | ||||||
Item 5. | Other Information | 33 | ||||||
Item 6. | Exhibits | 34 | ||||||
SIGNATURES | 35 | |||||||
Unless the context otherwise requires, for purposes of the Quarterly Report on Form 10-Q, the words “we,” “us,” “our,” the “Company,” “SPS,” and “SPS Commerce” refer to SPS Commerce, Inc.
| SPS COMMERCE, INC. | 2 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
Table of Contents
PART I. – FINANCIAL INFORMATION
Item 1. Financial Statements
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (in thousands, except shares) | September 30, 2026 | December 31, 2025 | |||||||||
| ASSETS | (unaudited) | ||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable | |||||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Accounts receivable, net | |||||||||||
| Deferred costs | |||||||||||
| Other assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Deferred costs, non-current | |||||||||||
| Deferred income tax assets | |||||||||||
| Other assets, non-current | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued compensation | |||||||||||
| Accrued expenses | |||||||||||
| Deferred revenue | |||||||||||
| Operating lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Other liabilities | |||||||||||
| Deferred revenue, non-current | |||||||||||
| Operating lease liabilities, non-current | |||||||||||
| Deferred income tax liabilities | |||||||||||
| Other liabilities, non-current | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note I) | |||||||||||
| Stockholders' equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying notes to these condensed consolidated financial statements.
| SPS COMMERCE, INC. | 3 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
Table of Contents
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands, except per share amounts) (unaudited) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Loss on sale of business | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (expense) | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||
Unrealized loss on investments, net of tax benefit of $ | ( | ( | |||||||||||||||||||||
| Total other comprehensive income (expense) | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
| Net income per share | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares used to compute net income per share | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to these condensed consolidated financial statements.
| SPS COMMERCE, INC. | 4 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
Table of Contents
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Gain (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except shares) (unaudited) | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2025 | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to stock awards | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan activity | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including costs and excise tax | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Balances, June 30, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to stock awards | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan activity | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including costs and excise tax | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on investments, net of tax | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| SPS COMMERCE, INC. | 5 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
Table of Contents
| Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except shares) (unaudited) | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2024 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to stock awards | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan activity | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including costs and excise tax | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Reissuances of treasury stock | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Balances, December 31, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to stock awards | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Employee stock purchase plan activity | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Shares withheld for net share settlement | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including costs and excise tax | ( | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | — | (4,078) | ( | |||||||||||||||||||||||||||||||||||||||
| Unrealized loss on investments, net of tax | — | — | — | — | — | — | (13) | ( | |||||||||||||||||||||||||||||||||||||||
| Balances, September 30, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
See accompanying notes to these condensed consolidated financial statements.
| SPS COMMERCE, INC. | 6 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
Table of Contents
SPS COMMERCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | |||||||||||
| (in thousands) (unaudited) | 2026 | 2025 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Reconciliation of net income to net cash provided by operating activities | |||||||||||
| Deferred income taxes | |||||||||||
| Depreciation and amortization of property and equipment | |||||||||||
| Amortization of intangible assets | |||||||||||
| Accretion of purchase discounts on investments | ( | ||||||||||
| Provision for credit losses | |||||||||||
| Stock-based compensation | |||||||||||
| Loss on sale of business | |||||||||||
| Other, net | ( | ( | |||||||||
| Changes in assets and liabilities, net of effects of acquisitions | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Deferred costs | |||||||||||
| Other assets and liabilities | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Accrued compensation | ( | ||||||||||
| Accrued expenses | ( | ||||||||||
| Deferred revenue | |||||||||||
| Operating leases | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Purchases of investments | ( | ||||||||||
| Maturities of investments | |||||||||||
| Proceeds from sale, net | |||||||||||
| Acquisition of business, net | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Net proceeds from exercise of options to purchase common stock | |||||||||||
| Net proceeds from employee stock purchase plan activity | |||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of foreign currency exchange rate changes | |||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
See accompanying notes to these condensed consolidated financial statements.
| SPS COMMERCE, INC. | 7 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
Table of Contents
SPS COMMERCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A – General
Business Description
SPS Commerce is the leading intelligent supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations. Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.
Our network powers our portfolio of solutions that orchestrate the critical processes, protocols, and data exchanges needed to get the right product, in the right place, at the right time, every time. We have embedded deep expertise, proven processes, and compliance logic built from over 20 years of commerce intelligence into every connection, delivering a full-service experience that empowers partners to move forward faster, together.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SPS Commerce, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.
This interim financial information has been prepared under the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”). We have included all normal recurring adjustments which are, in the opinion of management, considered necessary to provide a fair presentation of our financial position, results of operations, stockholders’ equity, and cash flows for the interim periods presented. Operating results for these interim periods are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Significant Accounting Policies
There were no material changes in our significant accounting policies, nor were there differences in the basis of our segmentation, during the nine months ended September 30, 2026. See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.
| SPS COMMERCE, INC. | 8 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
Table of Contents
Accounting Pronouncements Recently Adopted
| Standard | Date of Issuance | Description | Date of Adoption | Effect on the Financial Statements | ||||||||||
ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets | July 2025 | This amendment allows for entities to elect a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. | 2026 | Upon adoption, the Company elected not to apply the current conditions practical expedient. The adoption did not have a material impact on our financial statements and related disclosures. | ||||||||||
Accounting Pronouncements Not Yet Adopted
| Standard | Date of Issuance | Description | Year of Required Adoption | Effect on the Financial Statements | ||||||||||
ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) | November 2024 | This amendment requires that an entity disclose in its notes to financial statements specified information about certain costs and expenses. | 2027 | We are currently evaluating the adoption on our financial statements and anticipate the impact will result in additional disclosure. | ||||||||||
ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) | September 2025 | This amendment modernizes the accounting for software costs under Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software by removing all references to software development project stages. The amendment requires an entity to begin capitalizing software costs when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. | 2028 | We are currently evaluating the adoption on our financial statements and related disclosures. | ||||||||||
ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvement | December 2025 | The amendments in this update result in a comprehensive list of interim disclosures that are required by GAAP. The objective of the amendments is to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. | 2028 | We are currently evaluating the adoption on our interim financial statements and related disclosures. | ||||||||||
ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) | May 2026 | This standard establishes guidance for the recognition, measurement, presentation, and disclosure of environmental credits and environmental credit obligations. | 2028 | We are currently evaluating the adoption, but do not expect a material impact on our financial statements and related disclosures. | ||||||||||
| SPS COMMERCE, INC. | 9 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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NOTE B – Business Acquisitions and Other Transactions
Divestiture of 3P Revenue Recovery Business
On June 30, 2026, we completed our sale of the third-party ("3P") portion of the revenue recovery business and received $8.8 million in cash, net of cash transferred. The transaction enables us to focus on first-party ("1P") suppliers whose retail trading relationships are better aligned with our core solutions.
The assets and liabilities transferred in the transaction primarily consisted of intangible assets as well as goodwill and working capital balances associated with the divested business. The divested business represented an immaterial portion of our consolidated operations and financial position.
In connection with the sale, we recognized a loss of approximately $23.5 million, which is included in operating income in the accompanying condensed consolidated statements of comprehensive income. The transaction did not qualify for discontinued operations presentation and does not represent a strategic shift nor is it expected to have a material impact on the Company's future consolidated results of operations, financial position, or cash flows.
Carbon6 Technologies, Inc.
On December 30, 2024, we entered into a definitive agreement to acquire all of the outstanding equity ownership interests of Carbon6 Technologies, Inc. ("Carbon6"), a provider of software tools to Amazon sellers, including specialized offerings for revenue recovery for both 1P and 3P suppliers. The acquisition became effective on February 4, 2025 ("Close"). Pursuant to the definitive agreement, the total consideration transferred was $210.2 million, net of cash acquired. The consideration was comprised of $142.5 million paid in cash, net of cash acquired, and 378,100 shares of SPS common stock (valued at $67.7 million, determined at acquisition Close based on the price of SPS common stock). The shares were issued from SPS treasury shares. The purchase accounting for the acquisition is final. The goodwill associated with the acquisition is not deductible for income tax purposes.
| SPS COMMERCE, INC. | 10 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Purchase Price Allocations
We accounted for the acquisition as a business combination. We allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.
The following table presents the purchase consideration and estimated fair values of acquired assets and liabilities recorded in the Company's condensed consolidated balance sheet as of the acquisition date:
| (in thousands) | Carbon6 | ||||
| Cash paid | $ | ||||
| Equity consideration | |||||
| Total consideration | $ | ||||
| Estimated fair value of assets and liabilities acquired: | |||||
| Cash | |||||
| Accounts receivable | |||||
| Other assets, current and non-current | |||||
| Intangible assets | |||||
| Customer relationships | |||||
| Developed technology | |||||
| Deferred revenue | ( | ||||
| Other liabilities, current and non-current | ( | ||||
| Deferred income tax liabilities, net | ( | ||||
| Total fair value of assets and liabilities acquired | $ | ||||
| Goodwill | $ | ||||
The following table summarizes the estimated useful lives for each acquired intangible asset:
| Carbon6 | |||||
| Customer relationships | |||||
| Developed technology | |||||
NOTE C – Revenue
Revenue by Product Type
We derive our revenues from the following revenue streams:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Recurring revenues: | |||||||||||||||||||||||
| Fulfillment | $ | $ | $ | $ | |||||||||||||||||||
Decision Intelligence(1) | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Recurring revenues | |||||||||||||||||||||||
| One-time revenues | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
(1) Formerly known as Analytics.
| SPS COMMERCE, INC. | 11 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Revenue by Geographic Area
Domestic revenue, which we define as revenue that was attributable to customers based within the United States ("U.S."), was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Domestic revenue | % | % | % | % | |||||||||||||||||||
No single jurisdiction outside of the U.S. had revenues in excess of 10%.
Recurring Revenues
We define recurring revenue as active contracts during the reporting period under which the customer regularly pays us fees for subscription-based and reoccurring services. All components of the contracts that are not expected to recur (primarily set-ups and professional services) are excluded from recurring revenue.
Revenue for subscription-based services is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our contracts primarily range from monthly to annual and generally allow the customer to cancel the contract for any reason with 30 to 90 days’ notice. Timing of billings varies by customer and by contract type and are either in advance or within 30 days of the service being performed.
Given that the recurring revenue contracts are generally for one year or less, we have applied the practical expedient to not disclose information about the remaining performance obligations for recurring revenue contracts.
One-time Revenues
One-time revenues consist of set-up fees and miscellaneous fees from customers.
Set-up revenues
Set-up fees, a component of our revenue, are specific for each connection a customer has with a trading partner. These nonrefundable fees are necessary for our customers to utilize our services and do not provide any standalone value. Many of our customers have connections with numerous trading partners.
Set-up fees constitute a material right that provide customers a significant future incentive that would not be otherwise available to that customer unless they entered into the contract, as the set-up fees will not be incurred again upon contract renewal. As such, set-up fees and related costs are deferred and recognized ratably, generally over two years , which is the estimated period for which a material right is present for our customers.
The table below presents the activity of the portion of the deferred revenue liability relating to set-up fees. We expect to recognize $10.3 million of the balance as of September 30, 2026 as revenue over the next 12 months with the remaining amount recognized thereafter.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Invoiced set-up fees | |||||||||||||||||||||||
| Recognized set-up fees | ( | ( | ( | ( | |||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | |||||||||||||||||||
Miscellaneous one-time revenues
Miscellaneous one-time fees primarily consist of professional services and testing and certification.
The contract period for these one-time fees is one year or less and recognized at the time service is provided. We have applied the practical expedient to not disclose information about the remaining performance obligations for miscellaneous one-time fee contracts since they have original durations of one year or less.
Deferred Revenue
We recognized revenue of $10.5 million and $9.9 million in the three months ended September 30, 2026 and 2025, respectively, and $70.1 million and $68.3 million in the nine months ended September 30, 2026 and 2025, respectively, from amounts included in deferred revenue at the beginning of the period.
| SPS COMMERCE, INC. | 12 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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NOTE D – Deferred Costs
The deferred costs activity was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Incurred deferred costs | |||||||||||||||||||||||
| Amortized deferred costs | ( | ( | ( | ( | |||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | |||||||||||||||||||
NOTE E – Fair Value Measurements
Cash equivalents and investments, as measured at fair value on a recurring basis, consisted of the following:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Fair Value Level | Amortized Cost | Unrealized Gains (Losses), net | Fair Value | Amortized Cost | Unrealized Gains (Losses), net | Fair Value | ||||||||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||||||||||||||||||||
| Money market funds | Level 1 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||||||||||||||||||||||
| Marketable securities: | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial paper | Level 2 | ( | ||||||||||||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
NOTE F – Allowance for Credit Losses
The allowance for credit losses activity, included in accounts receivable, net, was as follows:
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Balance, beginning of period | $ | $ | |||||||||
| Provision for credit losses | |||||||||||
| Write-offs, net of recoveries | ( | ( | |||||||||
| Balance, end of period | $ | $ | |||||||||
| SPS COMMERCE, INC. | 13 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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NOTE G – Property and Equipment, Net
Property and equipment, net consisted of the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | |||||||||
| Internally developed software | $ | $ | |||||||||
| Computer equipment | |||||||||||
| Leasehold improvements | |||||||||||
| Office equipment and furniture | |||||||||||
| Property and equipment, cost | |||||||||||
| Less: accumulated depreciation and amortization | ( | ( | |||||||||
| Total property and equipment, net | $ | $ | |||||||||
Property and equipment, net located outside of the U.S. was as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||
| International property and equipment | % | % | |||||||||
NOTE H – Goodwill and Intangible Assets, Net
Goodwill
The activity in goodwill was as follows:
| (in thousands) | Nine Months Ended September 30, 2026 | ||||
| Balance, beginning of period | $ | ||||
| Disposition due to divestiture | ( | ||||
| Foreign currency translation and other | ( | ||||
| Balance, end of period | $ | ||||
Intangible Assets
Effective September 1, 2026, we revised the estimated remaining useful life of certain developed technology intangible assets acquired in the Carbon6 acquisition and related internally developed software. In connection with the planned consolidation of our revenue recovery offerings onto a single platform, we expect the acquired technology to cease being used in mid-2027 and revised its remaining useful life accordingly. The revision was accounted for prospectively as a change in accounting estimate and increased amortization of intangible assets and internally developed software by $1.3 0.9 0.03 4.0 million in the fourth quarter of 2026 and $6.9 million in 2027.
Intangible assets, net consisted of the following:
| September 30, 2026 | |||||||||||||||||||||||||||||
| ($ in thousands) | Gross Carrying Amount | Accumulated Amortization | Foreign Currency Translation | Net | Weighted Average Remaining Amortization Period | ||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
| Developed technology | ( | ( | |||||||||||||||||||||||||||
| $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||
| SPS COMMERCE, INC. | 14 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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| December 31, 2025 | |||||||||||||||||||||||||||||
| ($ in thousands) | Gross Carrying Amount | Accumulated Amortization | Foreign Currency Translation | Net | Weighted Average Remaining Amortization Period | ||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Developed technology | ( | ||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | |||||||||||||||||||||||||
The estimated future annual amortization expense related to intangible assets is as follows:
| (in thousands) | |||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total future amortization | $ | ||||
NOTE I – Commitments and Contingencies
Leases
Effective October 01, 2025, we executed the sixth amendment to our lease agreement (the "Amendment") for our current headquarters located in Minneapolis, Minnesota where we lease approximately 198,000 square feet. The Amendment extends the lease term to end in July 2043 and provides approximately $33 million of lease incentives, which were included in the initial measurement of the operating lease right-of-use asset. The Company expects to utilize approximately $14 million of these lease incentives during the year ending December 31, 2027, with the remaining balance to be utilized thereafter.
The components of lease expense were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Variable lease cost | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Supplemental cash flow information related to leases was as follows:
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
| Operating cash outflows from operating leases | $ | $ | |||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | |||||||||||
Supplemental balance sheet information related to operating leases was as follows:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Weighted-average remaining lease term | |||||||||||
| Weighted-average discount rate | % | % | |||||||||
| SPS COMMERCE, INC. | 15 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Future minimum lease payments under operating leases are presented net of lease incentives deemed payable at lease commencement. At September 30, 2026, our future minimum payments under operating leases were as follows:
| (in thousands) | |||||
| Remainder of 2026 | $ | ||||
| 2027 | ( | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total future gross payments | |||||
| Less: imputed interest | ( | ||||
| Total operating lease liabilities | $ | ||||
During the fourth quarter of 2025, we entered into an operating lease agreement for new office space in Rogers, Arkansas. The lease has not yet commenced and therefore the operating lease right-of-use asset and operating lease liability are not recorded on our unaudited condensed consolidated balance sheets as of September 30, 2026. This operating lease is expected to commence during the first quarter of 2027, with a lease term of approximately 10.75 years (129 months) and total estimated undiscounted lease payments of approximately $13.9 million.
Purchase Commitments
We have entered into separate noncancelable agreements with computing infrastructure, productivity software, customer relationship management, and performance and security data analytics vendors for services through 2030. At September 30, 2026, our remaining purchase commitments and estimated purchase timing were as follows:
| (in thousands) | |||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Total estimated future purchases | $ | ||||
NOTE J – Stockholders’ Equity
Share Repurchase Programs
Our Board of Directors has authorized multiple non-concurrent programs to repurchase our common stock. On February 10, 2026 (announced February 12, 2026), our Board of Directors approved an additional $200.0 million in repurchase authority under our previously announced share repurchase program ("2025 Program") that was approved on October 29, 2025 to repurchase up to $100.0 million of our common stock, excluding costs to obtain, for a total authorized repurchase amount of $300.0 million. Under the program, purchases may be made from time to time in the open market or in privately negotiated purchases, or both. The share repurchase program became effective December 1, 2025 and expires on December 1, 2027.
Details of the programs and activity thereunder through September 30, 2026 were as follows:
| (in thousands) | Effective Date | Expiration Date | Share Value Authorized for Repurchase | Share Value Repurchased | Unused & Expired Share Repurchase Value | Share Value Available for Future Repurchase | ||||||||||||||||||||||||||
| 2024 Program | August 2024 | July 2026 | $ | $ | $ | N/A | ||||||||||||||||||||||||||
| 2025 Program | December 2025 | December 2027 | $ | $ | N/A | $ | ||||||||||||||||||||||||||
| SPS COMMERCE, INC. | 16 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Share repurchases are accounted for as the trade date occurs and are reflected in the condensed consolidated financial statements at cost, including the costs incurred to acquire the shares and accrued excise taxes. Share repurchases that have not yet settled in cash are included in accounts payable in the condensed consolidated balance sheet.
The share repurchase activity by period was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands, except shares and per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Number of shares repurchased | |||||||||||||||||||||||
| Total share repurchased cost | $ | $ | $ | $ | |||||||||||||||||||
| Average total cost per repurchased share | $ | $ | $ | $ | |||||||||||||||||||
Treasury Stock Reissuance
In connection with the acquisition of Carbon6, the Company re-issued treasury shares as part of the purchase consideration (see Note B – Business Acquisitions and Other Transactions for further information).
NOTE K – Stock-Based Compensation
Our equity compensation plans include grants of incentive and nonqualified stock options, performance share units (“PSUs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and deferred stock units (“DSUs”), to employees, executive officers, and non-employee directors. We also provide an employee stock purchase plan (“ESPP”) and 401(k) match to eligible participants. At September 30, 2026, there were 10.3 million shares available for grant under approved equity compensation plans.
Stock-based compensation expense was allocated in the condensed consolidated statements of comprehensive income as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Cost of revenues | $ | $ | $ | $ | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Stock-based compensation expense by grant type or plan was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Stock options | $ | $ | $ | $ | |||||||||||||||||||
| PSUs | |||||||||||||||||||||||
| RSUs & DSUs | |||||||||||||||||||||||
| RSAs | |||||||||||||||||||||||
| ESPP | |||||||||||||||||||||||
| 401(k) stock match | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
As of September 30, 2026, there was $115.1 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a primarily straight-line basis over a weighted average period of 2.6 years.
| SPS COMMERCE, INC. | 17 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Stock Options
Our stock option activity was as follows:
| Nine Months Ended September 30, 2026 | |||||||||||
| Options (#) | Weighted Average Exercise Price ($/share) | ||||||||||
| Outstanding, beginning of period | $ | ||||||||||
| Granted | |||||||||||
| Exercised | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding, end of period | $ | ||||||||||
Of the total outstanding options at September 30, 2026, 0.2 million were exercisable. The outstanding and exercisable options had a weighted average exercise price of $120.51 per share and a weighted average remaining contractual life of 2.5 years.
The weighted average grant date fair value of options granted during the nine months ended September 30, 2026, was $20.85 per share. This was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
| Life (in years) | |||||
| Volatility | % | ||||
| Dividend yield | |||||
| Risk-free interest rate | % | ||||
Performance Share Units, Restricted Stock Units and Awards, and Deferred Stock Units
In each of the quarters ended March 31, 2026, 2025, 2024, and 2023, we granted PSU awards with a target performance level. These awards are earned based upon our Company’s total shareholder return as compared to an indexed total shareholder return over the course of a fiscal based three-year
Activity for our PSUs, RSUs, RSAs, and DSUs in aggregate was as follows:
| Nine Months Ended September 30, 2026 | |||||||||||
| # | Weighted Average Grant Date Fair Value ($/share) | ||||||||||
| Outstanding, beginning of period | $ | ||||||||||
| Granted | |||||||||||
| Vested and common stock issued | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding, end of period | $ | ||||||||||
The number of PSUs, RSUs, RSAs, and DSUs outstanding at September 30, 2026 included less than 0.1 million units that have vested, but the shares of common stock have not yet been issued, pursuant to the terms of the underlying agreements.
| SPS COMMERCE, INC. | 18 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Employee Stock Purchase Plan
Our ESPP activity was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands, except shares) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Amounts for shares purchased | $ | $ | $ | $ | |||||||||||||||||||
| Shares purchased | |||||||||||||||||||||||
A total of 1.4 million shares of common stock are reserved for issuance under the ESPP at September 30, 2026.
The fair value was estimated based on the market price of our common stock at the beginning of the offering period using the following assumptions:
| Life (in years) | |||||
| Volatility | % | ||||
| Dividend yield | |||||
| Risk-free interest rate | % | ||||
NOTE L – Income Taxes
We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust the provision for discrete tax items recorded in the period. Our provision for income taxes includes current federal, state, and foreign income tax expense, as well as deferred tax expense.
Differences between our effective tax rate and statutory tax rates are primarily due to the impact of permanently non-deductible expenses partially offset by the federal research and development credits and tax benefits associated with foreign-derived deduction-eligible income. Additionally, excess tax benefits generated upon settlement or exercise of stock awards are recognized as a reduction to income tax expense as a discrete tax item in the quarter that the event occurs, creating potentially significant fluctuation in tax expense by quarter and by year.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the U.S., making permanent most of the expiring key provisions of the 2017 Tax Cuts and Jobs Act, including, but not limited to, U.S. corporate international tax provisions, federal bonus depreciation, and deductions for domestic research and development expenditures. We evaluated the OBBBA and estimate the 2026 impact to be primarily a reduction in cash taxes due to the accelerated deduction of previously capitalized research and experimental expenditures and the state level impact of conformity legislation passed to date. The remaining provisions of the OBBBA are not expected to have a material impact.
NOTE M – Other Income and Expense
Other income, net included the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Investment income | $ | $ | $ | $ | |||||||||||||||||||
| Realized gain (loss) from investments and foreign currency transactions | (13) | ||||||||||||||||||||||
| Other income (expense), net | (226) | ( | 292 | ( | |||||||||||||||||||
| Total other income, net | $ | $ | $ | $ | |||||||||||||||||||
| SPS COMMERCE, INC. | 19 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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NOTE N – Net Income Per Share
The components and computation of basic and diluted net income per share were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands, except per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Numerator | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Denominator | |||||||||||||||||||||||
| Weighted average common shares outstanding, basic | |||||||||||||||||||||||
| Options to purchase common stock and ESPP | |||||||||||||||||||||||
| PSUs, RSUs, RSAs, and DSUs | |||||||||||||||||||||||
| Weighted average common shares outstanding, diluted | |||||||||||||||||||||||
| Net income per share | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
The number of outstanding potential common shares that were excluded from the calculation of diluted net income per share as they were anti-dilutive was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Anti-dilutive shares | |||||||||||||||||||||||
| SPS COMMERCE, INC. | 20 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements regarding us, our business prospects and our results of operations are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Similarly, statements that describe our future plans, objectives or goals are also forward-looking. Forward-looking statements may also be made from time to time in oral presentations, including telephone conferences and/or webcasts open to the public. Shareholders, potential investors, and others are cautioned that all forward-looking statements involve risks and uncertainties that could cause results in future periods to differ materially from those anticipated by some of the statements made in this report, including the risks and uncertainties described under the heading “Risk Factors” appearing in our Annual Report on Form 10-K for the year ended December 31, 2025, as may be updated in our subsequent Quarterly Reports on Form 10-Q or other filings from time to time. We expressly disclaim any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise interested parties of the risks and factors that may affect our business.
Overview
SPS Commerce is the leading intelligent supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations. Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.
Our network powers our portfolio of solutions that orchestrate the critical processes, protocols, and data exchanges needed to get the right product, in the right place, at the right time, every time. We have embedded deep expertise, proven processes, and compliance logic built from over 20 years of commerce intelligence into every connection, delivering a full-service experience that empowers partners to move forward faster, together.
We plan to continue to grow our business by further penetrating the supply chain management market, increasing revenues from our customers as their businesses grow, expanding our distribution channels, expanding our international presence and, from time to time, developing new products and applications. We also intend to selectively pursue acquisitions that will add customers, allow us to expand into new regions, or allow us to offer new functionalities.
Key Financial Terms, Metrics and Non-GAAP Measures
We have several key financial terms, metrics, and non-GAAP measures as discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Recurring Revenue - We define recurring revenue as active contracts during the reporting period under which the customer regularly pays us fees for subscription-based and reoccurring services. All components of the contracts that are not expected to recur (primarily set-ups and professional services) are excluded from recurring revenue.
Recurring Revenue Customers - We define recurring revenue customers as customers with an active recurring revenue contract at the end of the period. A small portion of our recurring revenue customers consist of separate units within a larger organization and are separately invoiced. We treat each of these units, which may include divisions, departments, affiliates and franchises, as distinct recurring revenue customers. Following the divestiture of our 3P Revenue Recovery business on June 30, 2026, all recurring revenue customers are classified as 1P. Prior-period references to 3P relate to customers that only had an online marketplace or e-Commerce connection within our network.
| SPS COMMERCE, INC. | 21 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Annual Revenue Per User ("ARPU") - We calculate the annualized average recurring revenues per recurring revenue customer, by dividing the annualized recurring revenues for the period by the average of the beginning and ending number of recurring revenue customers for the period.
Non-GAAP Financial Measures - To supplement our condensed consolidated financial statements, we provide investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income per share, all of which are non-GAAP financial measures. We believe that these non-GAAP financial measures provide useful information to our management, Board of Directors, and investors regarding certain financial and business trends relating to our financial condition and results of operations.
Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation. We believe these non-GAAP financial measures are useful to an investor as they are widely used in evaluating operating performance. Adjusted EBITDA and Adjusted EBITDA Margin are used to measure operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of capital structure and the method by which assets were acquired.
These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in our condensed consolidated financial statements and are subject to inherent limitations. Investors should review the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures that are included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
| SPS COMMERCE, INC. | 22 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
The following table presents our results of operations for the periods indicated:
| Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||
| ($ in thousands) | $ | % of revenue(1) | $ | % of revenue(1) | $ | % | |||||||||||||||||||||||||||||
| Revenues | $ | 197,647 | 100 | % | $ | 189,904 | 100 | % | $ | 7,743 | 4 | % | |||||||||||||||||||||||
| Cost of revenues | 57,101 | 29 | 57,932 | 31 | (831) | (1) | |||||||||||||||||||||||||||||
| Gross profit | 140,546 | 71 | 131,972 | 69 | 8,574 | 6 | |||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||
| Sales and marketing | 43,474 | 22 | 42,322 | 22 | 1,152 | 3 | |||||||||||||||||||||||||||||
| Research and development | 16,546 | 8 | 17,276 | 9 | (730) | (4) | |||||||||||||||||||||||||||||
| General and administrative | 30,831 | 16 | 31,690 | 17 | (859) | (3) | |||||||||||||||||||||||||||||
| Amortization of intangible assets | 9,766 | 5 | 9,493 | 5 | 273 | 3 | |||||||||||||||||||||||||||||
| Total operating expenses | 100,617 | 51 | 100,781 | 53 | (164) | — | |||||||||||||||||||||||||||||
| Income from operations | 39,929 | 20 | 31,191 | 16 | 8,738 | 28 | |||||||||||||||||||||||||||||
| Other income, net | 1,372 | 1 | 1,260 | 1 | 112 | 9 | |||||||||||||||||||||||||||||
| Income before income taxes | 41,301 | 21 | 32,451 | 17 | 8,850 | 27 | |||||||||||||||||||||||||||||
| Income tax expense | 10,618 | 5 | 6,882 | 4 | 3,736 | 54 | |||||||||||||||||||||||||||||
| Net income | $ | 30,683 | 16 | % | $ | 25,569 | 13 | % | $ | 5,114 | 20 | % | |||||||||||||||||||||||
| (1) Amounts in column may not foot due to rounding | |||||||||||||||||||||||||||||||||||
Revenues - The increase in revenue period-over-period resulted from an increased usage of our products by our 1P recurring revenue customers.
•ARPU increased 22% to approximately $16,200 for the three months ended September 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.
•The number of recurring revenue customers decreased 15% to approximately 46,700 at September 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business, which resulted in a decrease of approximately 8,050 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.
Recurring revenues increased 4% to $189.0 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Recurring revenues accounted for 96% of our total revenues for both the three months ended September 30, 2026 and 2025. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.
Cost of Revenues - The decrease in cost of revenues was primarily attributable to a $2.7 million decrease in third-party personnel costs and a $0.4 million decrease in occupancy and software costs, partially offset by a $1.2 million increase in personnel-related costs, primarily due to higher benefits from increased claims, and by a $0.9 million increase in internally-developed software depreciation expense.
Sales and Marketing Expenses - The increase in sales and marketing expense was primarily due to a $1.1 million increase in personnel-related costs, including third-party personnel, driven by higher consulting costs for one-time projects, partially offset by lower salaries from decreased headcount. Increases in stock-based compensation were largely offset by lower partner and reseller fees.
Research and Development Expenses - The decrease in research and development expense was primarily driven by a $1.3 million decrease in personnel-related costs, including third-party personnel, due to decreased headcount, partially offset by a $0.6 million increase in hardware and software costs, driven by higher cloud and AI expenses.
General and Administrative Expenses - The decrease in general and administrative expense was primarily driven by a $1.1 million decrease in expense reflecting the timing of funding the SPS Foundation and a $0.9 million decrease in
| SPS COMMERCE, INC. | 23 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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expense related to expected credit losses, reflecting improved collection strategies, enhanced risk monitoring, and lower customer cancellations. These decreases were partially offset by a $0.9 million increase in personnel-related costs, primarily due to higher consulting costs supporting internal initiatives, and a $0.4 million increase in stock-based compensation expense.
Amortization of Intangible Assets - The increase in amortization expense was primarily due to the change in the estimated useful life of certain developed technology intangible assets acquired in the Carbon6 acquisition, partially offset by the normal run-off of amortization related to finite-lived intangible assets.
Other Income, Net - The increase in other income, net was primarily due to a $0.5 million increase in investment income from interest earned on a larger cash and investments balance, partially offset by a $0.2 million decrease in unrealized foreign currency gains and a $0.2 million increase in realized foreign currency losses.
Income Tax Expense - The increase in income tax expense was primarily driven by the increase in pre-tax book income and nondeductible compensation. The increase was partially offset by the tax benefits associated with foreign-derived deduction-eligible income.
Adjusted EBITDA - Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the three months ended September 30, 2026, included asset disposals. Net income is the most directly comparable GAAP measure of financial performance.
The following table provides a reconciliation of net income to Adjusted EBITDA:
| Three Months Ended September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Net income | $ | 30,683 | $ | 25,569 | |||||||
| Income tax expense | 10,618 | 6,882 | |||||||||
| Depreciation and amortization of property and equipment | 6,072 | 5,354 | |||||||||
| Amortization of intangible assets | 9,766 | 9,493 | |||||||||
| Stock-based compensation expense | 15,693 | 14,453 | |||||||||
| Realized loss (gain) from investments and foreign currency transactions | 13 | (205) | |||||||||
| Investment income | (1,611) | (1,076) | |||||||||
| Other | (366) | 10 | |||||||||
| Adjusted EBITDA | $ | 70,868 | $ | 60,480 | |||||||
Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.
The following table provides a comparison of Margin to Adjusted EBITDA Margin:
| Three Months Ended September 30, | |||||||||||
| (in thousands, except Margin and Adjusted EBITDA Margin) | 2026 | 2025 | |||||||||
| Revenue | $ | 197,647 | $ | 189,904 | |||||||
| Net income | 30,683 | 25,569 | |||||||||
| Margin | 16 | % | 13 | % | |||||||
| Adjusted EBITDA | 70,868 | 60,480 | |||||||||
| Adjusted EBITDA Margin | 36 | % | 32 | % | |||||||
| SPS COMMERCE, INC. | 24 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the three months ended September 30, 2026, asset disposals, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.
The following table provides a reconciliation of net income per share to non-GAAP income per share:
| Three Months Ended September 30, | |||||||||||
| (in thousands, except per share amounts) | 2026 | 2025 | |||||||||
| Net income | $ | 30,683 | $ | 25,569 | |||||||
| Stock-based compensation expense | 15,693 | 14,453 | |||||||||
| Amortization of intangible assets | 9,766 | 9,493 | |||||||||
| Realized loss (gain) from investments and foreign currency transactions | 13 | (205) | |||||||||
| Other | (366) | 10 | |||||||||
| Income tax effects of adjustments | (5,628) | (6,365) | |||||||||
| Non-GAAP income | $ | 50,161 | $ | 42,955 | |||||||
| Shares used to compute net income and non-GAAP income per share | |||||||||||
| Basic | 35,900 | 37,895 | |||||||||
| Diluted | 36,209 | 37,993 | |||||||||
| Net income per share, basic | $ | 0.85 | $ | 0.67 | |||||||
| Non-GAAP adjustments to net income per share, basic | 0.55 | 0.46 | |||||||||
| Non-GAAP income per share, basic | $ | 1.40 | $ | 1.13 | |||||||
| Net income per share, diluted | $ | 0.85 | $ | 0.67 | |||||||
| Non-GAAP adjustments to net income per share, diluted | 0.54 | 0.46 | |||||||||
| Non-GAAP income per share, diluted | $ | 1.39 | $ | 1.13 | |||||||
| SPS COMMERCE, INC. | 25 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
The following table presents our results of operations for the periods indicated:
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||
| ($ in thousands) | $ | % of revenue(1) | $ | % of revenue(1) | $ | % | |||||||||||||||||||||||||||||
| Revenues | $ | 587,583 | 100 | % | $ | 558,853 | 100 | % | $ | 28,730 | 5 | % | |||||||||||||||||||||||
| Cost of revenues | 175,346 | 30 | 174,672 | 31 | 674 | — | |||||||||||||||||||||||||||||
| Gross profit | 412,237 | 70 | 384,181 | 69 | 28,056 | 7 | |||||||||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||||||||
| Sales and marketing | 132,144 | 22 | 127,390 | 23 | 4,754 | 4 | |||||||||||||||||||||||||||||
| Research and development | 51,420 | 9 | 51,986 | 9 | (566) | (1) | |||||||||||||||||||||||||||||
| General and administrative | 103,851 | 18 | 93,598 | 17 | 10,253 | 11 | |||||||||||||||||||||||||||||
| Amortization of intangible assets | 28,467 | 5 | 27,590 | 5 | 877 | 3 | |||||||||||||||||||||||||||||
| Loss on sale of business | 23,454 | 4 | — | — | 23,454 | n/a | |||||||||||||||||||||||||||||
| Total operating expenses | 339,336 | 58 | 300,564 | 54 | 38,772 | 13 | |||||||||||||||||||||||||||||
| Income from operations | 72,901 | 12 | 83,617 | 15 | (10,716) | (13) | |||||||||||||||||||||||||||||
| Other income, net | 4,774 | 1 | 4,240 | 1 | 534 | 13 | |||||||||||||||||||||||||||||
| Income before income taxes | 77,675 | 13 | 87,857 | 16 | (10,182) | (12) | |||||||||||||||||||||||||||||
| Income tax expense | 20,399 | 3 | 20,359 | 4 | 40 | — | |||||||||||||||||||||||||||||
| Net income | $ | 57,276 | 10 | % | $ | 67,498 | 12 | % | $ | (10,222) | (15) | % | |||||||||||||||||||||||
(1) Amounts in column may not foot due to rounding | |||||||||||||||||||||||||||||||||||
Revenues - The increase in revenue period-over-period resulted from an increased usage of our products by our 1P recurring revenue customers.
•ARPU increased 5% to approximately $14,850 for the nine months ended September 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.
•The number of recurring revenue customers decreased 15% to approximately 46,700 at September 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business (initially acquired in February 2025 as part of the Carbon6 acquisition), which resulted in a decrease of approximately 8,050 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.
Recurring revenues increased 6% to $563.9 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Recurring revenues accounted for 96% and 95% of our total revenues for the nine months ended September 30, 2026 and 2025, respectively. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.
Cost of Revenues - The increase in cost of revenues was primarily driven by a $3.1 million increase in depreciation expense and a $1.4 million increase in deferred costs due to lower capitalization associated with slower hiring. These increases were partially offset by a $2.4 million decrease in personnel-related costs, including third-party personnel, and $1.3 million of lower software costs due to platform consolidation.
Sales and Marketing Expenses - The increase in sales and marketing expense was primarily driven by a $3.1 million increase in stock-based compensation expense, partially attributable to equity awards granted to executives hired in the prior year, a $2.1 million increase in third-party personnel costs, and a $0.6 million increase in sales enablement software costs. These increases were partially offset by a $1.0 million decrease in partner and reseller fees due to the divestiture.
Research and Development Expenses - The decrease in research and development expense was primarily driven by a $1.5 million decrease in personnel-related costs, reflecting lower headcount and reduced third-party personnel costs,
| SPS COMMERCE, INC. | 26 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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and a $0.6 million decrease in depreciation expense. These decreases were partially offset by a $1.4 million increase in hardware and software costs, attributable to higher cloud and AI costs.
General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $6.2 million increase in personnel-related costs, including third-party personnel, due to consulting costs related to internal initiatives and non-capitalizable activities supporting system implementations, and a $5.3 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of equity awards upon executive retirement. Hardware and software costs also increased by $2.2 million, primarily due to higher amortization expense related to system implementations. These increases were partially offset by a $3.1 million decrease in other expenses, reflecting the timing of funding of the SPS Foundation and a decrease in sales and use tax expense.
Amortization of Intangible Assets - The increase in amortization of intangible assets was driven by an additional month of amortization related to intangible assets acquired from Carbon6 in February 2025 and the change in the estimated useful life of certain developed technology intangible assets acquired from Carbon6, partially offset by the normal run-off of amortization related to finite-lived intangible assets.
Loss on Sale of Business - The loss on sale of business was due to the divestiture of the 3P portion of the revenue recovery business. Refer to Note B – Business Acquisitions and Other Transactions for more information regarding the divestiture.
Other Income, Net - The increase in other income, net was primarily due to the remeasurement of an acquisition-related earn-out liability and higher investment income from interest earned on a larger cash and investments balance, partially offset by lower interest rates in 2026.
Income Tax Expense - Income tax expense remained relatively consistent compared to the prior year period. The decrease in pre-tax book income and the tax benefits associated with foreign-derived deduction-eligible income were offset by the reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price.
Adjusted EBITDA - Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the nine months ended September 30, 2026 included the remeasurement of an acquired earn-out liability, asset disposals, and the net impact of divestiture-related exit and disposal activity. Net income is the most directly comparable GAAP measure of financial performance.
The following table provides a reconciliation of net income to Adjusted EBITDA:
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Net income | $ | 57,276 | $ | 67,498 | |||||||
| Income tax expense | 20,399 | 20,359 | |||||||||
| Depreciation and amortization of property and equipment | 18,056 | 15,302 | |||||||||
| Amortization of intangible assets | 28,467 | 27,590 | |||||||||
| Stock-based compensation expense | 52,462 | 43,318 | |||||||||
| Realized gain from investments and foreign currency transactions | (509) | (678) | |||||||||
| Investment income | (3,973) | (3,613) | |||||||||
| Loss on sale of business | 23,454 | — | |||||||||
| Other | (201) | 1,129 | |||||||||
| Adjusted EBITDA | $ | 195,431 | $ | 170,905 | |||||||
Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.
| SPS COMMERCE, INC. | 27 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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The following table provides a comparison of Margin to Adjusted EBITDA Margin:
| Nine Months Ended September 30, | |||||||||||
| (in thousands, except Margin and Adjusted EBITDA Margin) | 2026 | 2025 | |||||||||
| Revenue | $ | 587,583 | $ | 558,853 | |||||||
| Net income | 57,276 | 67,498 | |||||||||
| Margin | 10 | % | 12 | % | |||||||
| Adjusted EBITDA | 195,431 | 170,905 | |||||||||
| Adjusted EBITDA Margin | 33 | % | 31 | % | |||||||
Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the nine months ended September 30, 2026, the remeasurement of an acquired earn-out liability, asset disposals, net impact of divestiture-related exit and disposal activity, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.
The following table provides a reconciliation of net income per share to non-GAAP income per share:
| Nine Months Ended September 30, | |||||||||||
| (in thousands, except per share amounts) | 2026 | 2025 | |||||||||
| Net income | $ | 57,276 | $ | 67,498 | |||||||
| Stock-based compensation expense | 52,462 | 43,318 | |||||||||
| Amortization of intangible assets | 28,467 | 27,590 | |||||||||
| Realized gain from investments and foreign currency transactions | (509) | (678) | |||||||||
| Loss on sale of business | 23,454 | — | |||||||||
| Other | (201) | 1,129 | |||||||||
| Income tax effects of adjustments | (23,277) | (19,935) | |||||||||
| Non-GAAP income | $ | 137,672 | $ | 118,922 | |||||||
| Shares used to compute net income and non-GAAP income per share | |||||||||||
| Basic | 36,599 | 37,939 | |||||||||
| Diluted | 36,740 | 38,070 | |||||||||
| Net income per share, basic | $ | 1.56 | $ | 1.78 | |||||||
| Non-GAAP adjustments to net income per share, basic | 2.20 | 1.35 | |||||||||
| Non-GAAP income per share, basic | $ | 3.76 | $ | 3.13 | |||||||
| Net income per share, diluted | $ | 1.56 | $ | 1.77 | |||||||
| Non-GAAP adjustments to net income per share, diluted | 2.19 | 1.35 | |||||||||
| Non-GAAP income per share, diluted | $ | 3.75 | $ | 3.12 | |||||||
| SPS COMMERCE, INC. | 28 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Critical Accounting Policies and Estimates
This discussion of our financial condition and results of operations is based upon our condensed consolidated financial statements, which are prepared in accordance with GAAP and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The preparation of these condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. On an ongoing basis, we evaluate our estimates, judgments, and assumptions. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. Our actual results may differ from these estimates under different assumptions or conditions.
A critical accounting policy or estimate is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective, or complex judgments relating to uncertain matters that could have a material effect on our financial condition and results of operations. Accordingly, we believe that our policies for revenue recognition, internally developed software, business combinations, and the useful lives of long-lived assets, including acquired intangible assets, are the most critical to fully understand and evaluate our financial condition and results of operations.
We amortize our finite-lived intangible assets, which consist primarily of customer relationships and developed technology, on a straight-line basis over their estimated useful lives. Determining the useful life of an intangible asset requires significant management judgment and an analysis of all pertinent factors, including the expected use of the asset, legal, regulatory, or contractual provisions, and the effects of obsolescence, known technological advances, demand, and competition. We evaluate the remaining useful lives of these assets each reporting period to determine whether events and circumstances warrant a revision. If the underlying assumptions governing the amortization of an intangible asset were later determined to have significantly changed, we may be required to adjust the amortization period to reflect a new estimate of its useful life, which would increase or decrease the annual amortization charge associated with the asset.
Effective September 1, 2026, we revised the estimated remaining useful life of certain developed technology intangible assets acquired in the Carbon6 acquisition and related internally developed software. In connection with the planned consolidation of our revenue recovery offerings onto a single platform, we expect the acquired technology to cease being used in mid-2027 and revised its remaining useful life accordingly. The revision was accounted for prospectively as a change in accounting estimate and increased amortization of intangible assets and internally developed software by $1.3 million for the three and nine months ended September 30, 2026 decreasing net income by $0.9 million, or $0.03 per basic and diluted share. We expect the revision to increase amortization of intangible assets and internally developed software by approximately $4.0 million in the fourth quarter of 2026 and $6.9 million in 2027.
For additional information regarding our critical accounting policies and estimates, see the discussion under "Critical Accounting Policies and Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.
Liquidity and Capital Resources
Sources of Liquidity
As of September 30, 2026, our principal sources of liquidity were cash and cash equivalents and short-term investments of $183.5 million and net accounts receivable of $66.2 million. Our investments are selected in accordance with our investment policy, with a goal to preserve principal, provide liquidity, and maximize income consistent with minimizing risk of material loss. Our cash equivalents and short-term investments are generally held in highly liquid money market funds and commercial paper.
Statements of Cash Flows Summary
The summary of activity within the condensed consolidated statements of cash flows was as follows:
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Net cash provided by operating activities | $ | 185,664 | $ | 132,919 | |||||||
| Net cash used in investing activities | (41,922) | (161,501) | |||||||||
| Net cash used in financing activities | (141,452) | (80,151) | |||||||||
| SPS COMMERCE, INC. | 29 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Operating Activities
The increase in cash provided by operating activities from the nine months ended September 30, 2025 to the nine months ended September 30, 2026 was primarily due to a $12.8 million increase in net income adjusted for non-cash items. Additionally, fluctuations in operating assets and liabilities resulted in an increase of $40.0 million driven by changes in the amount and timing of settlements.
Investing Activities
The decrease in cash used in investing activities from the nine months ended September 30, 2025 to the nine months ended September 30, 2026 was primarily due to cash used in the prior year to acquire a business of $142.6 million partially offset by $29.4 million of net cash used to purchase investments in the current year.
Financing Activities
The increase in cash used in financing activities from the nine months ended September 30, 2025 to the nine months ended September 30, 2026 was primarily due to an increase in cash used for share repurchases of $57.6 million year-over-year to continue to deliver shareholder value.
Contractual and Commercial Commitment Summary
Our contractual obligations and commercial commitments as of September 30, 2026 are summarized below:
| Payments Due by Period | |||||||||||||||||||||||||||||
| (in thousands) | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | Total | ||||||||||||||||||||||||
Operating lease obligations(1) | $ | (10,990) | $ | 4,110 | $ | 6,195 | $ | 23,277 | $ | 22,592 | |||||||||||||||||||
| Purchase commitments | 15,808 | 41,128 | 86 | — | 57,022 | ||||||||||||||||||||||||
| Total | $ | 4,818 | $ | 45,238 | $ | 6,281 | $ | 23,277 | $ | 79,614 | |||||||||||||||||||
(1) Operating lease obligations include imputed interest and are presented net of lease incentives deemed payable at lease commencement. We expect to utilize approximately $14 million of the available lease incentives under the sixth amendment to our current headquarters lease during the year ending December 31, 2027, with the approximately remaining $19 million to be utilized thereafter.
During the fourth quarter of 2025, we entered into an operating lease agreement for new office space in Rogers, Arkansas. The lease has not yet commenced and therefore the operating lease right-of-use asset and operating lease liability are not recorded on our unaudited condensed consolidated balance sheets as of September 30, 2026. This operating lease is
| SPS COMMERCE, INC. | 30 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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expected to commence during the first quarter of 2027, with a lease term of approximately 10.75 years (129 months) and total estimated undiscounted lease payments of approximately $13.9 million.
Future Capital Requirements
Our future capital requirements may vary significantly from those now planned and will depend on many factors, including:
•costs to develop and implement new products and applications, if any;
•sales and marketing resources needed to further penetrate our market and gain acceptance of new products and applications that we may develop;
•expansion of our operations in the U.S. and internationally;
•response of competitors to our products and applications; and
•use of capital for acquisitions.
Historically, we have experienced increases in our expenditures consistent with the growth in our operations and personnel, and we anticipate that our expenditures will continue to increase as we expand our business.
We believe our cash, cash equivalents, and cash flows from our operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.
Foreign Currency Exchange and Inflation Rate Changes
For information regarding the effect of foreign currency exchange and inflation rate changes, refer to the section entitled “Foreign Currency Exchange Risk,” included in Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk” of this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity Risk
The principal objectives of our investment activities are to preserve principal, provide liquidity, and maximize income consistent with minimizing risk of material loss. We are exposed to market risk related to changes in interest rates. We may choose based on our investment strategy to hold cash, cash equivalents, and investments in interest-bearing or non-interest-bearing accounts. Based upon a sensitivity model, an immediate hypothetical 50-basis point change in interest rates on interest-bearing balances at September 30, 2026, would have resulted in a $0.2 million impact on our investment income included in net income for the three months ended September 30, 2026. We do not enter into investments for trading or speculative purposes. We did not have any variable interest rate outstanding debt as of September 30, 2026.
Foreign Currency Exchange Risk
Due to international operations, we have revenue, expenses, assets, and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Australian dollar, Canadian dollar, and Euro. Our consolidated balance sheet, results of operations, and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. Our predominate exposure to foreign currency exchange rate fluctuations is due to non-monetary assets held in currencies other than the U.S. dollar, and thus fluctuations in foreign currencies primarily result in comprehensive income (loss), not net income (loss).
Our sales are primarily denominated in U.S. dollars. Our expenses are generally denominated in the local currencies in which our operations are located. As of September 30, 2026, we maintained 9% of our total cash, cash equivalents, and short-term investments in foreign currencies. Based upon a sensitivity model, an immediate hypothetical 10% unfavorable change in all foreign currency exchange rates would have resulted in a $1.7 million impact on our cash, cash equivalents, and short-term investments held in currencies other than the U.S. dollar as of September 30, 2026.
We have not used any forward contracts or currency borrowings to hedge our exposure to foreign currency exchange risk, although we may do so in the future.
| SPS COMMERCE, INC. | 31 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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During the three and nine months ended September 30, 2026, inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are continuing a phased implementation of new enterprise systems for financial and human capital management to update our existing core systems. We will continue to evaluate each quarter whether there are changes that materially affect our internal control over financial reporting.
| SPS COMMERCE, INC. | 32 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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PART II. – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to, or aware of, any claims or actions that would have a material adverse effect on our business, financial condition, or results of operations. From time to time, we may be named as a defendant in legal actions or otherwise be subject to claims arising from our normal business activities. We believe that we have obtained adequate insurance coverage and/or rights to indemnification in connection with potential legal proceedings that may arise.
Item 1A. Risk Factors
There have been no material changes in our risk factors from those disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Share Repurchases
Issuer Repurchases of Equity Securities
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program | ||||||||||||||||||||||
| July 1 - 31, 2026 | 272,903 | $ | 63.18 | 272,903 | $ | 169,139,000 | ||||||||||||||||||||
| August 1 - 31, 2026 | 218,800 | 77.96 | 218,800 | 152,080,000 | ||||||||||||||||||||||
| September 1 - 30, 2026 | 192,792 | 81.43 | 192,792 | 136,380,000 | ||||||||||||||||||||||
| Total | 684,495 | $ | 73.05 | 684,495 | $ | 136,380,000 | ||||||||||||||||||||
For more information regarding our share repurchase programs, refer to Note J to our condensed consolidated financial statements, included in Part I of this Quarterly Report on Form 10-Q.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
Insider Adoption Termination
During the three months ended September 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
| SPS COMMERCE, INC. | 33 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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Item 6. Exhibits
| Number | Description | |||||||
| 3.1 | Tenth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on May 16, 2024). | |||||||
| 3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to our Form 10-K filed with the SEC on February 21, 2023). | |||||||
| 31.1 | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith). | |||||||
| 31.2 | Certification of Principal Financial Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith). | |||||||
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |||||||
| 101 | Interactive Data Files Pursuant to Rule 405 of Regulation S-T (filed herewith). The XBRL instance document does not appear in the Interactive Data File because its tags are embedded within the Inline XBRL document. | |||||||
| 104 | The cover page from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, formatted in Inline XBRL. | |||||||
| SPS COMMERCE, INC. | 34 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: October 29, 2026 | SPS COMMERCE, INC. | ||||
| /s/ JOSEPH DEL PRETO | |||||
| Joseph Del Preto | |||||
| Executive Vice President and Chief Financial Officer | |||||
| (principal financial and accounting officer) | |||||
| SPS COMMERCE, INC. | 35 | Form 10-Q for the Quarterly Period ended September 30, 2026 | ||||||