Stock Analysis

Stock Analysis · SPS Commerce Inc (SPSC)

Overview

SPS Commerce Inc. (SPSC) provides cloud-based software that helps retailers, grocery chains, distributors, and brands exchange business documents and sales information with each other. In practical terms, it helps companies automate and standardize workflows such as purchase orders, invoices, shipping notices, inventory availability, and sales reporting across many trading partners.

Its platform is designed to reduce manual work (emails, spreadsheets, custom file transfers) and help businesses meet large retailers’ requirements for electronic data exchange. The company generally positions itself as a network and services layer that connects many partners, so a supplier can onboard and transact with multiple retailers through one provider.

In its financial reporting, SPS Commerce primarily describes revenue in terms of recurring subscription revenue (access to its cloud solutions) and services revenue (implementation, onboarding, and related professional services). Exact percentage splits can vary by year and are detailed in company filings.

Typical revenue categories discussed in filings include:

Subscription revenue (recurring fees for cloud solutions)
Services revenue (implementation/onboarding and related services)

From 2021 to 2024, total revenue increased meaningfully (about $385.3M to $637.8M). Over the same period, gross profit also rose (about $253.6M to $427.1M). Operating expenses grew as well—especially selling, general and administrative costs and research and development—showing continued investment to support expansion, while net income increased from about $44.6M (2021) to about $77.1M (2024).

Key Figures

Metric	Value	Industry ⓘ
Date	Feb 08, 2026
Context
Sector	Technology
Industry	Software - Application
Market Cap ⓘ	$3.01B
Beta ⓘ	0.56
Fundamental
P/E Ratio ⓘ	35.50	27.79
Profit Margin ⓘ	11.66%	6.02%
Revenue Growth ⓘ	16.00%	15.80%
Debt to Equity ⓘ	1.01%	25.15%
PEG ⓘ	4.71
Free Cash Flow ⓘ	$148.39M

SPS Commerce’s market capitalization is about $3.0B. The stock’s beta of ~0.56 suggests it has historically moved less than the broader market on average (though any single stock can still be volatile). The company’s profit margin is ~11.7%, which is higher than the listed industry median (~6.0%), while year-over-year revenue growth is ~16%, roughly in line with the industry median (~15.8%). Balance-sheet leverage appears low with debt-to-equity near ~1% versus an industry median near ~25%. Trailing twelve-month free cash flow is about $148M.

Growth (Medium)

SPS Commerce operates in an area shaped by long-running trends: supply-chain digitization, ongoing growth in omnichannel retail, and the need for suppliers to comply with large retailers’ electronic transaction requirements. These drivers are not tied to a single product cycle; they tend to persist as trading networks expand and as retailers standardize processes.

A key strategic element is the company’s network-style model: as more retailers and suppliers connect through the same ecosystem, onboarding new relationships can become simpler for customers than building many one-off connections. This can support recurring revenue because customers often keep these connections in place once they are embedded in daily operations.

The revenue growth pattern shown is relatively steady in the mid-teens to low-20% range across multiple quarters, which can be consistent with a subscription-led model. The latest value shown (about 16% year-over-year) remains close to the broader software application peer median provided.

Free cash flow has trended upward over the period shown (roughly $79.7M in 2021 to about $140.7M in 2025), which can matter for long-term durability because it indicates the business has been generating cash beyond operating needs and capital spending. Potential catalysts discussed in company materials typically relate to adding new retailer relationships, expanding supplier adoption, and increasing usage of additional modules/services within existing customers.