SPS Commerce Reports Third Quarter 2011 Financial Results

Revenue was $15.5 million in the third quarter of 2011, compared to $11.5 million in the third quarter of 2010, reflecting 35% growth in total revenue from the third quarter 2010. Recurring revenue grew 37% from the third quarter of 2010.

"We are experiencing momentum across our entire business, highlighted by our accelerating recurring revenue growth which exceeded 35% this quarter," said Archie Black, President and CEO of SPS Commerce. "2011 has been a tremendous year for SPS Commerce and we will continue to ramp our investments in sales, marketing and product development to take advantage of the large market possibility we are addressing. The supply chain is rapidly adopting cloud computing and we are positioned to capture significant market share as the largest pure SaaS provider to this global industry."

The nine months ended September 30

Revenue for the nine months ended September 30, 2011 was $42.1 million, compared to $32.7 million for the comparable period in 2010. Net income for the nine months ended September 30, 2011 was $560,000, or $0.04 per diluted share, compared to net income of $2.4 million, or $0.22 per diluted share, for the comparable period in 2010. Non-GAAP net income per diluted share for the nine months ended September 30, 2011 was $0.18 compared to non-GAAP net income per diluted share of $0.26 for the comparable period in 2010. Adjusted EBITDA for the first nine months ended September 30, 2011 was $3.8 million, compared to $4.1 million for the comparable period in 2010.

"Our strong top line growth this quarter was driven by three factors. First, the success of our viral platform drove recurring revenue growth through our installed customer base and increased wallet share. Second, we increased our revenue from testing and certification through an increased number of retailer enablement campaigns which demonstrates the industry's need for more efficient supply chain processes. And third, we continue to successfully integrate our Direct EDI acquisition, bringing more of their clients onto our platform and creating additional revenue expansion opportunities," said Kim Nelson, Chief Financial Officer of SPS Commerce.

The fourth quarter of 2011

For the fourth quarter of 2011, revenue is expected to be in the range of $15.7 million to $15.9 million, representing growth of 32% to 33% compared to the fourth quarter of 2010. Fourth quarter net income per diluted share is expected to be in the range of $0.00 to $0.02. Non-GAAP net income per diluted share is expected to be in the range of $0.06 to $0.08. Adjusted EBITDA is expected to be in the range of $1.4 to $1.6 million. Non-cash, share-based compensation expense is expected to be in broad outline $500,000.

For the full year of 2011, revenue is expected to be in the range of $57.8 to $58.0 million, representing growth of in broad outline 30% compared to 2010. Full year net income per diluted share is expected to be in the range of $0.05 to $0.06. Non-GAAP net income per diluted share is expected to be in the range of $0.24 to $0.25. Adjusted EBITDA is expected to be in the range of $5.2 to $5.4 million. Non-cash, share-based compensation expense is expected to be roughly $1.8 million and amortization is expected to be $650,000.

SPS Commerce is a leading provider of on-demand supply chain management solutions, providing integration, collaboration, connectivity, visibility and data analytics to thousands of clients worldwide. We deliver our solutions over the Internet using a Software-as-a-Service model to improve the way suppliers, retailers, distributors and other clients manage and fulfill orders. Our SPSCommerce.net platform features pre-built integrations used by current and new clients alike, spanning 3,000 order management models across 1,500 retailers, grocers and distributors, as then as integrations to over 100 accounting, warehouse management, enterprise resource planning, and packing and shipping applications. More than 40,000 customers across more than 40 countries have used SPSCommerce.net, making it one of the largest trading partner integration centers. SPS Commerce has 43 consecutive quarters of increased earnings and is headquartered in Minneapolis. For additional information, please contact SPS Commerce at 866-245-8100 or visit www.spscommerce.com .

To supplement its financial statements, SPS Commerce as well provides investors with Adjusted EBITDA and non-GAAP net income per share, which are non-GAAP financial measures. SPS Commerce believes that these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. SPS Commerce's management uses these non-GAAP measures to compare the company's performance to that of prior periods for trend analyses and planning purposes. It uses Adjusted EBITDA for purposes of determining executive and senior management incentive compensation. These measures are as well presented to the company's board of directors.