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what it is
SPS Commerce helps retailers and suppliers send orders, track sales, and onboard vendors without turning supply chains into group projects.
how it gets paid
Last year Sps Commerce made $752M in revenue. fulfillment was the main engine at $301M, or 40% of sales.
why it's growing
Revenue grew 17.8% last year. The minnesota-based company looks poised for future growth supported by its ability to capitalize on the rising demand for supply-chain efficiencies.
what just happened
The latest report showed revenue of $559M and EPS of $1.77, with both up sharply from last year.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
50/100 earnings predictability — expect surprises
21.7x trailing p/e — priced about right
17.0% return on capital — nothing to write home about
xvary composite: 60/100 — average
What they do
SPS Commerce helps retailers and suppliers send orders, track sales, and onboard vendors without turning supply chains into group projects.
This business sits inside the messiest part of retail: getting orders from one company to another without breaking anything. Once your suppliers, retailers, and logistics partners are connected, ripping it out is painful. That is switching costs (hard to leave) → customers stay put → so what: SPS turned $752M of revenue into a 20.1% net profit margin and 17.0% return on capital.
How they make money
$752M
annual revenue · their business grew +17.8% last year
fulfillment
$301M
+20.0%
recurring platform revenue
$233M
+18.0%
analytics and sell-through
$98M
+17.8%
sourcing and item onboarding
$75M
+17.8%
other network services
$45M
+17.8%
The products that matter
retail and supplier connectivity software
Retail Network Platform
$752M revenue · +17.8%
it's the core engine: one platform connecting trading partners across orders, invoices, and fulfillment, and it produced the full $752M business last year.
core engine
order routing and fulfillment workflows
Fulfillment
+20% recent growth
management said the fulfillment business grew 20% in the latest quarter. that's faster than the company average and a sign customers are expanding usage after the first integration.
faster than company growth
revenue recovery and adjacent tools
Revenue Recovery
newer offering · segment dollars not disclosed
this is the cross-sell bet. the company says it helps retailers find lost revenue from supply-chain errors, but the disclosure is still light, so you are underwriting potential before you get full segment proof.
watch execution
Key numbers
$752M
annual revenue
This is the size of the machine today. You are not buying a concept stock. You are buying a business already doing three-quarters of a billion in sales.
20.1%
net margin
Net margin means profit after bills → how much money stays → so what: SPS keeps about 20 cents from every dollar of sales.
17.0%
return on capital
Return on capital means profit versus money invested → efficiency → so what: this business earns better returns than a lot of plain software plumbing companies.
$117
18-month target
That target sits about 30% above $90.07, which gives you a clear scorecard for whether the market starts paying up for the same fundamentals.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 40 / 100
- net profit margin 20.1% — keeps 20 cents of every dollar in revenue
- return on equity 17% — $0.17 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in SPSC 3 years ago → it's now worth $6,780.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
The latest report showed revenue of $559M and EPS of $1.77, with both up sharply from last year.
The cleaner proof was the earnings surprise: last earnings came in at $1.14 versus a $1.00 estimate, a 14.0% beat. Gross margin held at 68.7%, which says the software model is still doing software things.
$559M
revenue
$1.77
eps
68.7%
gross margin
the number that mattered
Gross margin at 68.7% matters most because it tells you the core engine is still high-margin software, not low-margin services dressed up as software.
-
despite facing macroeconomic challenges and increased scrutiny on customer spending, the company reported third-quarter revenue of $189.9 million, reflecting a 16% increase over the prior year.
-
recurring revenue grew 18%, and the fulfillment business posted 20% vs. prior year growth.sps added a net total of 450 customers during the september period, with a total of nearly 55,000 recurring revenue customers. furthermore, the technology company ended the quarter with $134 million in cash and investments and repurchased $30 million worth of shares. although there were challenges in its revenue recovery business, which was weaker than expected due in part to changes in amazon’s inventory policies, long-term growth opportunities should support the company’s competitive position in the retail ecosystem.
-
revenue recovery represents a significant growth opportunity.designed to help retailers and suppliers identify and recover lost revenue within their supply chains, this solution involves addressing inefficiencies and errors. by offering this service, sps commerce can expand its portfolio of solutions, which also creates cross-selling opportunities.
-
we are cautiously optimistic on sps commerce.the minnesota-based company looks poised for future growth supported by its ability to capitalize on the rising demand for supply-chain efficiencies. as retailers and suppliers face growing complexity in their operations, sps commerce’s data-driven solutions and retail cloud services platform are uniquely positioned to help streamline processes, improve collaboration, and enhance trading partner relationships.
-
strategic acquisitions are also a key part of the growth equation.recent additions like supplypike and carbon6 have strengthened sps commerce’s capabilities in revenue recovery and expanded its customer base.
source: company earnings report, 2026
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What could go wrong
the #1 risk is retail and supplier software spending cooling faster than sps can cross-sell new modules.
med
customer adds slow from here
SPS added 450 net new customers in the latest quarter. if that pace fades, the network story starts looking more mature than investors expect.
with 2026 revenue estimated at $815M, the street is already bracing for growth to slow to about 8.4% from 17.8% last year.
med
revenue recovery stays more promise than proof
management is expanding into revenue recovery, helped by acquisitions like SupplyPike and Carbon6. the problem is segment disclosure is thin, so investors cannot yet see how large or profitable that bet really is.
if newer modules fail to scale, the valuation loses one of its cleaner arguments for reacceleration.
med
software margins stop expanding
a 30.0% operating margin and 20.4% net margin make this look like a high-quality software company. if integration costs or sales spending rise, the market will notice quickly.
when a company trades at 21.7x trailing earnings, margin compression matters almost as much as revenue misses.
med
institutional sponsorship keeps leaking
in 3q2025, 199 institutions bought while 241 sold. that's not a collapse, but it does tell you the big money has not been in a hurry to defend the stock.
if fundamentals stay fine but sponsorship stays weak, valuation recovery can take longer than shareholders want.
the combined risk picture is pretty simple: last year revenue grew 17.8%, but consensus for 2026 is $815M, or about 8.4% growth. if customer adds, recurring revenue, and newer modules do not carry the load, the stock does not have much narrative help.
source: institutional data · regulatory filings · risk analysis
Pay attention to
calendar
the next earnings report
you want to see whether quarterly revenue can hold near the recent $190M level while margins stay healthy.
metric
recurring revenue growth
18% growth in the latest quarter was the clean signal. if that slips below total company growth, the sticky part of the story is weakening.
trend
customer adds
450 net new customers is the current pace. this company needs steady adds to justify calling the network expansion story intact.
risk
revenue recovery disclosure
management keeps pointing to newer tools and acquisitions. what you need next is segment clarity, not just strategic adjectives.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts do not see a strong near-term edge either way.
risk profile
average
stability score 3 — this sits close to the market middle, not a bunker and not a grenade.
chart momentum
below average
technical score 4 — the chart still looks weaker than most stocks from here.
earnings predictability
50 / 100
results are only middling on consistency, so you should expect some quarterly noise.
source: institutional data
Institutional activity
199 buyers vs. 241 sellers in 3q2025. total institutional holdings: 39.2M shares.
source: institutional data
Price targets
3-5 year target range
$71
$163
$90
current price
$117
target midpoint · +30% from current · 3-5yr high: $220 (+145% · 25% ann'l return)
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