SPS Commerce Reports 21% Revenue Growth to $181.5 Million in Q1 2025

SPS Commerce, Inc. reported a significant increase in financial performance for the first quarter of 2025, with revenues reaching $181.5 million, a 21% increase from $149.6 million in the same period last year. The company's net income also rose to $22.2 million, up 23% from $18.0 million in the prior year. This growth was attributed to an increase in average recurring revenues per customer and a 21% rise in the number of recurring revenue customers, which totaled approximately 54,150 by the end of March 2025.

The company experienced notable changes in its financial metrics compared to the previous fiscal period. The average recurring revenue per user (ARPU) increased by 11% to approximately $13,850, driven by heightened product usage among existing customers. The increase in customer count was primarily due to recent acquisitions, including the addition of approximately 8,500 customers from the acquisition of Carbon6 Technologies, which was finalized in February 2025. This acquisition, along with the earlier purchase of SupplyPike, has expanded SPS Commerce's market presence and customer base.

Operationally, SPS Commerce reported a 23% increase in recurring revenues, which accounted for 95% of total revenues in the first quarter. The company also noted a rise in operating expenses, which increased to $98.7 million from $82.7 million, largely due to higher personnel-related costs associated with increased headcount across various departments. The total number of employees has grown as the company continues to expand its operations and product offerings.

In terms of cash flow, SPS Commerce generated $40.0 million from operating activities, an increase from $34.1 million in the previous year. However, cash used in investing activities surged to $147.8 million, primarily due to the acquisition of Carbon6. The company also repurchased $40.0 million worth of its common stock during the quarter, reflecting its commitment to returning value to shareholders. As of March 31, 2025, SPS Commerce held $94.9 million in cash and cash equivalents, down from $241.0 million at the end of 2024.

Looking ahead, SPS Commerce aims to continue its growth trajectory by further penetrating the supply chain management market, expanding its international presence, and developing new products. The company anticipates that both the number of recurring revenue customers and ARPU will increase as it executes its growth strategy. The management remains optimistic about the future, emphasizing the importance of strategic acquisitions and product enhancements to drive further revenue growth.