SPS Commerce, Inc. reports 35.2% Net Income growth in 2020 and 12.0% Revenue growth
02/11/2021 • About SPS Commerce, Inc. (
$SPSC) • By InTwits
SPS Commerce, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- SPS Commerce, Inc. is a growth stock: 2020 revenue growth was 12.0%, 5 year revenue CAGR was 14.5% at 2020 ROIC 12.3%
- EBITDA Margin is expanding: 22.9% in 2020 vs. 20.6% in 2019 vs. 9.8% in 2016
- EBITDA Margin is quite volatile: 22.9% in 2020, 20.6% in 2019, 15.9% in 2018, 9.9% in 2017, 9.8% in 2016
- SPS Commerce, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's in pair with industry average of 14.0%
- CAPEX is quite volatile: $4m in 2020, $6m in 2019, $8m in 2018, $3m in 2017, $1m in 2016
- The company has highly profitable business model: ROIC is 12.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 12.0%. Revenue growth showed acceleration in 20Q4 - it increased 14.5% YoY. Revenue followed a declining trend in 2016-2020. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.3 pp from 20.6% to 22.9% in 2020. EBITDA Margin stuck to a growing trend at 3.7 pp per annum in 2016-2020.
Gross Margin increased slightly on 1.1 pp from 67.0% to 68.1% in 2020. SG&A as a % of Revenue decreased slightly on 0.82 pp from 41.1% to 40.3% in 2020. SG&A as a % of Revenue declined at -2.6 pp per annum in the last 5 years.
Net Income margin increased on 2.5 pp from 12.1% to 14.6% in 2020. Net Income margin grew at 3.5 pp per annum in 2016-2020.
Investments (CAPEX, working capital and M&A)
In 2020 SPS Commerce, Inc. had CAPEX/Revenue of 5.3%. The company's CAPEX/Revenue increased slightly on 2.0 pp from 3.3% in 2017 to 5.3% in 2020. Average CAPEX/Revenue for the last three years was 5.2%.
Return on investment
The company operates at good ROIC (12.3%) while ROE is low (11.8%). ROIC increased slightly on 0.89 pp from 11.4% to 12.3% in 2020. ROE increased slightly on 1.7 pp from 10.0% to 11.8% in 2020. ROIC followed a growing trend at 2.6 pp per annum in the last 5 years. ROE grew at 2.9 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is -1.8x Net Debt / EBITDA and 0.3x Debt / EBITDA. Debt decreased on 5.9% while cash dropped on 16.5%.
SPS Commerce, Inc. has no short term refinancing risk: cash is higher than short term debt (5,350.0%).
Valuation and dividends
The company's trades at EV/EBITDA 51.6x and P/E 83.7x.
Management team
The company's CEO Archie C Black has spent 19 years with the company. SPS Commerce, Inc.'s CFO Kimberly K Nelson "Kim" has spent 13 years with the company.
Financial and operational results
FY ended 12/31/2020
SPS Commerce, Inc. ($SPSC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 193.3 | 220.1 | 248.2 | 279.1 | 312.6 | 12.0% |
| Gross Profit | 128.9 | 146.5 | 166.5 | 186.9 | 212.8 | 13.9% |
| SG&A | 94.7 | 108.7 | 113.6 | 114.9 | 126.1 | 9.8% |
| EBITDA | 18.9 | 21.8 | 39.4 | 57.4 | 71.5 | 24.6% |
| EBIT | 7.5 | 10.0 | 26.7 | | | |
| Tax | 3.1 | 10.3 | 4.5 | | | |
| Net Income | 5.7 | 0.4 | 23.9 | 33.7 | 45.6 | 35.2% |
| Stock Based Compensation | 8.0 | 12.7 | 12.5 | | | |
Balance Sheet
|
|---|
| Cash | 115.9 | 123.1 | 133.9 | 179.3 | 149.7 | -16.5% |
| Accounts Receivable | 20.7 | 24.9 | 27.5 | | | |
| Accounts Payable | 2.3 | 4.5 | 4.4 | | | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 3.8 | 2.8 | -26.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 20.1 | 19.7 | -2.1% |
Cash flow
|
|---|
| Capex | 8.0 | 7.3 | 13.8 | 13.6 | 16.5 | 21.2% |
| Acquisitions | 18.0 | 0.5 | 27.3 | | | |
Ratios
|
|---|
| Revenue growth | 21.9% | 13.9% | 12.8% | 12.4% | 12.0% | |
| EBITDA growth | 13.6% | 15.4% | 81.1% | 45.7% | 24.6% | |
|
|---|
| Gross Margin | 66.7% | 66.5% | 67.1% | 67.0% | 68.1% | 1.1% |
| EBITDA Margin | 9.8% | 9.9% | 15.9% | 20.6% | 22.9% | 2.3% |
| EBIT Margin | 3.9% | 4.5% | 10.8% | | |
| SG&A, % of revenue | 49.0% | 49.4% | 45.8% | 41.1% | 40.3% | -0.8% |
| SBC, % of revenue | 4.2% | 5.8% | 5.0% | | |
| Net Income Margin | 3.0% | 0.2% | 9.6% | 12.1% | 14.6% | 2.5% |
| CAPEX, % of revenue | 4.1% | 3.3% | 5.5% | 4.9% | 5.3% | 0.4% |
|
|---|
| ROIC | 3.3% | 3.9% | 9.1% | 11.4% | 12.3% | 0.9% |
| ROE | 2.4% | 0.1% | 7.9% | 10.0% | 11.8% | 1.7% |
| Net Debt/EBITDA | -6.1x | -5.7x | -3.4x | -2.7x | -1.8x | 0.9x |
People
|
|---|
| Insider ownership | 1.1% | 1.1% | 1.1% | | | |
| Employees | 1,217 | 1,336 | 1,231 | | | |
| Revenue/Employee, th. $ | 159 | 165 | 202 | | | |
SPS Commerce, Inc. ($SPSC) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 74 | 76 | 80 | 83 | | 10.8% | 10.3% | 12.2% | 14.5% |
| EBITDA | 17 | 16 | 19 | 19 | | 38.3% | 17.5% | 23.0% | 22.1% |
| Net Income | 10 | 11 | 11 | 13 | | 39.7% | 27.3% | 27.6% | 47.0% |
Balance Sheet
|
|---|
| Cash | 184 | 175 | 209 | 150 | | 28.4% | 18.9% | 39.5% | -16.5% |
| Short Term Debt | 4 | 4 | 4 | 3 | | 10.2% | 20.8% | 32.7% | -26.0% |
| Long Term Debt | 19 | 18 | 17 | 20 | | 7.0% | 6.1% | 3.1% | -2.1% |
Ratios
|
|---|
| Gross Margin | 68.3% | 67.8% | 68.5% | 67.7% | | 0.2% | 2.4% | 1.3% | 0.6% |
| EBITDA Margin | 22.4% | 21.6% | 24.3% | 23.1% | | 4.4% | 1.3% | 2.1% | 1.4% |
| Net Income Margin | 12.8% | 14.8% | 14.3% | 16.2% | | 2.6% | 2.0% | 1.7% | 3.6% |
Peers in Application Software
Below we provide SPS Commerce, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.5% | 14.7% |
|---|
| SPS Commerce, Inc. ($SPSC) | - | 13.9% | 12.8% | 12.4% | 12.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 68.4% | 70.6% |
|---|
| SPS Commerce, Inc. ($SPSC) | 66.7% | 66.5% | 67.1% | 67.0% | 68.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 2.7% | 6.8% |
|---|
| SPS Commerce, Inc. ($SPSC) | 9.8% | 9.9% | 15.9% | 20.6% | 22.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| SPS Commerce, Inc. ($SPSC) | 4.1% | 3.3% | 5.5% | 4.9% | 5.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.8% | -11.8% | -10.6% | -4.5% | -2.2% |
|---|
| SPS Commerce, Inc. ($SPSC) | 3.3% | 3.9% | 9.1% | 11.4% | 12.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.6x | 0.4x | 0.3x |
|---|
| SPS Commerce, Inc. ($SPSC) | -6.1x | -5.7x | -3.4x | -2.7x | -1.8x |
