10q10k10q10k.net

What changed in SPS COMMERCE INC's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of SPS COMMERCE INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+172 added−172 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-19)

Top changes in SPS COMMERCE INC's 2025 10-K

172 paragraphs added · 172 removed · 112 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

28 edited+31 added−51 removed23 unchanged
Biggest changeIn each case, the supplier and retailer may engage us to work with their trading partner base to enable the new capability. Performing these programs on behalf of retailers and suppliers generates supplier sales leads for us. Referrals from Our Customers - We also receive sales leads from our customers seeking to communicate electronically with their trading partners.
Biggest changePerforming these programs on behalf of retailers and suppliers generates supplier sales leads for us. Referrals from Our Customers - We also receive sales leads from our customers seeking to communicate electronically with their trading partners. For example, a supplier may refer a third-party logistics provider or manufacturer, which is not in our network, to us.
Our Market Opportunity We believe we have a significant market opportunity to help organizations accelerate their omnichannel retail strategies with our retail network and supply chain products. • Omnichannel retail requires new connections/transactions - Each sales channel (wholesale, eCommerce, and marketplaces) brings new trading partners to the supply chain process.
Our Market Opportunity We believe we have a significant market opportunity to help organizations accelerate their omnichannel retail strategies with our supply chain network and supply chain products. • Omnichannel retail requires new connections/transactions - Each sales channel (wholesale, eCommerce, and marketplaces) brings new trading partners to the supply chain process.
Our pre-built dashboards create custom reports, or integrate data with existing tools, to gain insights to enhance product performance, forecasting, pricing, and inventory management. • Other Products - We also have other complementary products, including: ◦ Assortment - Our Assortment product simplifies the communication of robust, accurate item data by automatically translating item attributes and hierarchies through a single connection across all sales channels. ◦ Community - Our Community product allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through proven change management, onboarding programs, and supplier score carding.
Our pre-built dashboards create custom reports, or integrate data with existing tools, to gain insights to enhance product performance, forecasting, pricing, and inventory management. • Other Products - We also have other complementary products, including: ◦ Assortment - Our Assortment product simplifies the communication of robust, accurate item data by automatically translating item attributes and hierarchies through a single connection across all sales channels. ◦ Relationship Management - Our Relationship Management product (formerly known as Community) allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through proven change management, onboarding programs, and supplier score carding.
Our development efforts take place at our United States ("U.S.") locations in Minnesota, Iowa, Arkansas, and New Jersey, as well as in Melbourne, Australia; Toronto, Canada; Breukelen, Netherlands; and Kyiv, Ukraine. Operations We operate our infrastructure in third-party data centers located throughout North America, Europe, and Australia, as well as provisioned services with cloud providers.
Our development efforts take place at our United States ("U.S.") locations in Minnesota, Arkansas, and New Jersey, as well as in Melbourne, Australia; Toronto, Canada; Breukelen, Netherlands; Warsaw, Poland; and Kyiv, Ukraine. Operations We operate our infrastructure in third-party data centers located throughout North America, Europe, and Australia, as well as provisioned services with cloud providers.
We plan to continue to evaluate potential acquisitions based on the number of new customers, revenue, functionality, or geographic reach the acquisition would provide relative to the purchase price, and our ability to integrate and operate the acquired business. In 2024, we acquired SupplyPike, Inc.
We plan to continue to evaluate potential acquisitions based on the number of new customers, revenue, functionality, or geographic reach the acquisition would provide relative to the purchase price, and our ability to integrate and operate the acquired business. In 2025, we acquired Carbon6 Technologies Inc.
Our marketing programs include a variety of lead generating activities including digital marketing, account-based marketing, conferences and trade shows, sponsored events, and public relations activities targeted at key decision makers within our prospective customers.
Direct Marketing - We employ various marketing strategies. Our marketing programs include a variety of lead generating activities including digital marketing, account-based marketing, conferences and trade shows, sponsored events, and public relations activities targeted at key decision makers within our prospective customers.
As customers expand their business, the SPS Commerce retail network is a core part of their omnichannel strategy.
As customers expand their business, the SPS Commerce supply chain network is a core part of their omnichannel strategy.
Depending on the jurisdiction, trademarks are generally valid as long as they are in use or their registrations are properly maintained, and they have not been found to have become generic. Registrations of trademarks can also generally be renewed indefinitely as long as the trademarks are in use.
Depending on the jurisdiction, trademarks are generally valid as long as they are in use or their registrations are properly maintained, and they have not been found to have become generic. Registrations of trademarks can also generally be renewed indefinitely as long as the trademarks are in use. We have a number of patents acquired through acquisitions.
Our quarter ended December 31, 2024 represented our 96th consecutive quarter of revenue gr owth. Recurring revenues from recurring revenue customers acc ounted for 94%, 94%, and 93% of our total revenues for the years ended December 31, 2024, 2023, and 2022, respectively.
Our quarter ended December 31, 2025 represented our 100th consecutive quarter of revenue gr owth. Recurring revenues from recurring revenue customers acc ounted for 96%, 94%, and 94% of our total revenues for the years ended December 31, 2025, 2024, and 2023, respectively.
We have two patents acquired through the acquisitions of GCommerce, Inc. and SupplyPike, Inc. Our trade secrets consist primarily of the software we have developed for our SPS Commerce cloud-based products and network. Our software is also protected under copyright law, but we do not have any registered copyrights.
Our trade secrets consist primarily of the software we have developed for our SPS Commerce cloud-based products and network. Our software is also protected under copyright law, but we do not have any registered copyrights.
We believe our strong company culture and focus on providing meaningful work, professional development, flexible work options, competitive pay and benefits, as well as our commitment to belonging contributes to our high employee retention.
As a result of our strong company culture and focus on providing meaningful work, professional development, flexible work options, competitive pay and benefits, as well as our commitment to belonging, our 2025 employee retention rate was 88%.
In addition to these offerings, we also provide one-time services such as professional services and testing and certification. Growing Our Network As one of the largest providers of cloud-based services for retail supply chain management, SPS Commerce enables trading partner relationships among retailers, grocers, distributors, suppliers, manufacturers, and logistics firms that naturally lead to new customer acquisition opportunities.
Growing Our Network As one of the largest providers of cloud-based services for supply chain management, SPS Commerce enables trading partner relationships among retailers, grocers, distributors, suppliers, manufacturers, and logistics firms that naturally lead to new customer acquisition opportunities. “Network Effect” The value of our network increases exponentially with scale.
SPS COMMERCE, INC. 11 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Available Information We provide free access to various reports that we file with or furnish to the SEC through our website at www.spscommerce.com , as soon as reasonably practicable after they have been filed or furnished.
Available Information We provide free access to various reports that we file with or furnish to the SEC through our website at www.spscommerce.com, as soon as reasonably practicable after they have been filed or furnished.
As the retail industry continues to respond to the changing requirements of the omnichannel marketplace, and as the supply chain ecosystem becomes more complex and geographically dispersed, we believe the demand for supply chain management solutions will increase.
As the retail industry continues to respond to the changing requirements of the omnichannel marketplace, and as the supply chain ecosystem becomes more complex and geographically dispersed, we SPS COMMERCE, INC. 5 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents believe the demand for supply chain management solutions will increase.
SPS COMMERCE, INC. 8 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Intellectual Property and Proprietary Content SPS Commerce relies on a combination of copyright, trademark, patent and trade secret laws as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand.
Intellectual Property and Proprietary Content SPS Commerce relies on a combination of copyright, trademark, patent and trade secret laws as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand.
Our revenues are not concentrated with any customer, as our largest customer represented less than 1% of total revenues for the years ended December 31, 2024, 2023, and 2022. Increasing Demand for a Retail Network The retail industry is constantly evolving, and consumers expect more, which has accelerated the need for a more automated supply chain.
Our revenues are not concentrated with any customer, as our largest customer represented less than 1% of total revenues for the years ended December 31, 2025, 2024, and 2023. Increasing Demand for a Supply Chain Network Global commerce is constantly evolving, and consumer expectations continue to rise, accelerating the need for automated, coordinated supply chain operations.
Our products include: • Fulfillment - Our Fulfillment product offers a comprehensive solution designed to streamline supply chain operations. Our connections empower retailers, grocers, distributors, suppliers, manufacturers, and logistics firms to efficiently send and receive order data, ensuring accurate execution of required processes from order to invoicing and revenue recovery through fully automated operations.
Our connections empower retailers, brands, distributors, manufacturers, and logistics providers to efficiently send and receive order data, ensuring accurate execution of required processes from order to invoicing and revenue recovery through fully automated operations.
SPS COMMERCE, INC. 5 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Our Growth Strategy Our objective is to be the leading global retail network and provider of supply chain management products. Key elements of our strategy include: • Further Penetrate Our Current Market - We believe the global supply chain management market is underpenetrated.
Our Growth Strategy Our objective is to be the leading global supply chain network and provider of supply chain management products. Key elements of our strategy include: • Further Penetrate Our Current Market - We believe the global supply chain management market is underpenetrated.
By integrating seamlessly with existing systems, Fulfillment enhances day-to-day efficiency, reduces errors, and provides real-time visibility across all of our customers' order channels. SPS COMMERCE, INC. 4 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents • Analytics - Our Analytics product simplifies managing sell-through data from our customers’ business partners.
By integrating seamlessly with existing systems, Fulfillment enhances day-to-day efficiency, reduces errors, and provides real-time visibility across all of our customers' order channels. • Analytics - Our Analytics product simplifies managing sell-through data from our customers’ business partners. We handle data acquisition, cleansing, normalization, and delivery.
Our Community product is designed to manage this process and bring suppliers into compliance with new requirements. For instance, a supplier may wish to collaborate with their retailers around point-of-sale analytics data, or a retailer may decide to change the workflow or protocol by which it interacts with its suppliers.
For instance, a supplier may wish to collaborate with their retailers around point-of-sale analytics data, or a retailer may decide to change the workflow or protocol by which it interacts with its suppliers. In each case, the supplier and retailer may engage us to work with their trading partner base to enable the new capability.
Businesses using SPS Commerce products to automate supply chain functions with their trading partners can pivot quickly to new delivery models and capture market share. The visibility into orders, shipments, and inventory gained by automating trading relationships on the SPS Commerce retail network is critical to their success and offers a competitive advantage.
Businesses using SPS Commerce products to automate supply chain functions with their trading partners can pivot quickly to new delivery models and capture market share.
SPS COMMERCE, INC. 7 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Customer Success The Customer Success team includes retail and technology experts who implement our products on our customers' behalf, provide ongoing support, and collaborate with accounts to identify opportunities for added value from their existing products.
Customer Success The Customer Success team includes retail and technology experts who implement our products on our customers' behalf, provide ongoing support, and collaborate with accounts to identify opportunities for added value from their existing products. This team focuses on delivering services that build customer satisfaction and result in high customer retention rates.
This team focuses on delivering services that build customer satisfaction and result in high customer retention rates. Competition Vendors in the supply chain management industry offer products through three delivery methods: traditional on-premise software, managed services, and cloud-based full-service products. The market for cloud-based supply chain management products is fragmented and rapidly evolving.
Competition Vendors in the supply chain management industry offer products through three delivery methods: traditional on-premise software, managed services, and cloud-based full-service products. SPS COMMERCE, INC. 7 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents The market for cloud-based supply chain management products is fragmented and rapidly evolving.
The SPS Commerce retail network automates these relationships to quickly secure product details, initiate orders, and track performance to help keep operations running smoothly. Technology, Development and Operations Technology SPS Commerce was an early provider of cloud-services to the retail supply chain management industry, launching the first version of what would become our current services in 1997.
The SPS Commerce supply chain network automates these relationships to quickly secure product details, initiate orders, and track performance to help keep operations running smoothly.
As a result of this increased volume of activity among our network participants, we earn additional revenues from these participants. Customer Acquisition Sources Community - As retailers and suppliers reshape how they do business in an omnichannel landscape, they need to bring new capabilities and services to their trading partner networks.
Customer Acquisition Sources Relationship Management - As retailers and suppliers reshape how they do business in an omnichannel landscape, they need to bring new capabilities and services to their trading partner networks. Our Relationship Management product is designed to manage this process and bring suppliers into compliance with new requirements.
Within the U.S. 17% of our employees self-identified as members of an underrepresented group. As of December 31, 2024, our executive team is comprised of 6 individuals, of which one-third are women.
Our People As of December 31, 2025, our total workforce has increased to 2,948 worldwi de. 39% of our global workforce identifies as female and 2% did not specify their gender. Within the U.S. 13% of our employees self-identified as members of an underrepresented group. Our executive team is comprised of 7 individuals, of which 43% are women.
To navigate disruptions and meet growing consumer demands, companies across the retail ecosystem need to integrate their operations and communications from wholesale, eCommerce, and marketplace sales channels into a single omnichannel process. These channels no longer operate independently but instead in an interconnected fashion as consumers demand more buying and delivery options.
To navigate disruptions and meet growing demands, companies across the commerce ecosystem must orchestrate operations across wholesale, eCommerce, marketplace, and direct-to-consumer channels simultaneously. These channels no longer operate independently, and consumers expect a seamless experience regardless of how or where they shop.
SPS COMMERCE, INC. 6 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents • Consumers want new products - Retail assortments are ever-changing with seasonality shifts and new product introductions from companies of all sizes.
The visibility into orders, shipments, and inventory gained by automating trading relationships on the SPS Commerce supply chain network is critical to their success and offers a competitive advantage. • Consumers want new products - Retail assortments are ever-changing with seasonality shifts and new product introductions from companies of all sizes.
Removed
Item 1. Business Overview SPS Commerce is transforming how our global retail supply chain co-operates by creating a more dynamic, interconnected community where players can more freely connect, collaborate, and prosper together.
Added
Item 1. Business Overview SPS Commerce is a global supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations. Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.
Removed
Our comprehensive suite of cloud-based products and solutions lead the industry in establishing and maintaining stronger collaboration between retailers, grocers, distributors, suppliers, manufacturers, and logistics firms around the globe.
Added
Our network powers our portfolio of solutions that orchestrate the critical processes, protocols, and data exchanges needed to get the right product, in the right place, at the right time, every time.
Removed
Our products enable customers to enhance how they operate: both within their organizations and with their trading partners, with reduced operational costs and stronger supply chain performance; compete: with order and supply chain visibility, sell-through data, and optimized inventory management, and; adapt: through the limitless access to connect and grow with the world’s largest retail network of trading partners that only SPS Commerce can offer.
Added
We have embedded deep expertise, proven processes, and compliance logic built from over 20 years of commerce intelligence into every connection, delivering a full-service experience that empowers partners to move forward faster, together. For the years ended December 31, 2025, 2024, and 2023, we generated revenues of $751.5 million, $637.8 million, and $536.9 million, respectively.
Removed
As of December 31, 2024, we had approximately 45,350 customers with an active recurring revenue contract at the end of the period, which we refer to as recurring revenue customers, across approximately 90 countries .
Added
Managing this complexity across multiple trading partners, fulfillment models, and compliance requirements creates operational burden that most companies cannot efficiently handle on their own. Our Products SPS Commerce operates a global supply chain network where companies connect once and can immediately transact with thousands of trading partners across any channel.
Removed
Once connected to the SPS Commerce cloud-based retail network, our recurring revenue customers often require additional integrations to new organizations that represent an expansion of our cloud-based network and new sources of revenues for us. For the years ended December 31, 2024, 2023, and 2022, we generated revenues of $637.8 million, $536.9 million, and $450.9 million, respectively.
Added
We maintain the compliance rules, connection protocols, and data standards while our teams handle onboarding, monitor transactions, resolve exceptions, and optimize operations continuously. Our products include: • Fulfillment - Our Fulfillment product offers a comprehensive solution designed to streamline supply chain operations.
Removed
The coordination needed to manage multiple channels adds complexity to supply chains and trading partner relationships. The SPS Commerce retail network offers a single destination where companies can manage item details, orders, shipments, invoices, and much more for any customer and any channel.
Added
SPS COMMERCE, INC. 4 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents By embedding expertise, proven processes, and compliance logic into the network itself, we enable companies to participate in modern omnichannel commerce without building or managing the infrastructure themselves.
Removed
Our Products SPS Commerce operates one of the largest retail networks in the world to improve the way retailers, grocers, distributors, suppliers, and logistics firms work together. Our recurring revenue customers use SPS Comm erce products to expand and optimize the performance of their trading relationships through the network.
Added
Our recurring revenue customers use the network to expand and optimize their trading relationships while we handle the operational complexity. In addition to these offerings, we also provide one-time services such as professional services as well as testing and certification.
Removed
Our products fundamentally change how organizations communicate information to manage their omnichannel, supply chain, and other business requirements.
Added
After joining, customers typically discover that many of their existing or prospective trading partners are already connected, enabling immediate transaction capability. Each new participant can instantly communicate with our existing network of global connections, and existing participants gain access to transact with each new addition. This network effect creates significant opportunity for participants to realize incremental business.
Removed
Our products replace traditional, manual, or disparate approaches (such as email, phone, and fax), multiple channel-specific solution providers, as well as custom-built, point-to-point integrations by delivering a single smart connection to the entire SPS Commerce retail network of prebuilt connections to thousands of global trading partners.
Added
Suppliers can more easily onboard new retail customers. Retailers can more quickly activate new suppliers. Logistics providers can seamlessly integrate with new fulfillment relationships. As transaction volume grows among network participants through these expanded relationships, we earn additional revenue from increased activity across the network. Our customers grow their business relationships more efficiently, and we grow alongside them.
Removed
We handle data acquisition, cleansing, normalization, and delivery.
Added
("Carbon6"), a provider of software tools to Amazon.com, Inc. sellers, including specialized offerings for revenue recovery for both first-party ("1P") and third-party ("3P") suppliers. This acquisition further extends the capabilities of our network and added new customers and technology.
Removed
“Network Effect” Once connected to our retail network, trading partners can exchange electronic supply chain information with each other. The value of our network increases with the number of trading partners connected to it. After joining our retail network, customers often find that many of their existing or new trading partners are already on the network, allowing for easy connections.
Added
SPS COMMERCE, INC. 6 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Technology, Development and Operations Technology SPS Commerce was an early provider of cloud-services to the supply chain management industry, launching the first version of what would become our current services in 1997.
Removed
The addition of each new customer enables that customer to communicate with our existing customers and permits our existing customers to do business with the new customer. This “network effect” of adding additional customers to our products’ infrastructure creates a significant opportunity for existing customers to realize incremental sales by working with our new trading partners and vice versa.
Added
Human Capital HR Strategy At SPS, our ability to execute our mission - to power the connections that move the world of commerce forward - is fundamentally dependent on the quality, expertise, and velocity of our human capital.
Removed
For example, a supplier may refer a third-party logistics provider or manufacturer, which is not in our network, to us. Direct Marketing - We employ various marketing strategies.
Added
Our strategy is built on the principle that to sustain and grow the world’s largest supply chain network, we must invest in our people who possess the specific competencies required to maintain the reliability and scale of our cloud-based platform, accelerate our customers' adoption of omnichannel commerce, and navigate the increasingly complex global supply chain compliance requirements.
Removed
("SupplyPike"), a revenue recovery solution, Traverse Systems LLC ("Traverse Systems"), an industry-leading provider in retailer supply chain performance and vendor management, and Vision33's SAP Business One SPS Integration Technology. These acquisitions further extend the capabilities of our network and added new customers and technology.
Added
SPS COMMERCE, INC. 8 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents This focus positions our human capital as a long-term competitive asset, directly enabling customer success and driving profitable growth.
Removed
Human Capital At SPS, we recognize that our employees are crucial to our ongoing growth and success. Our core values shape our culture and serve as the foundation for fostering an engaging workplace, attracting the right talent, and developing our teams. These values also inform how we interact with customers, partners, and each other.
Added
While 78% of our workforce is based in North America, we continue to build critical skills and capabilities in Europe and Asia Pacific. In addition to having statutory obligations for employee representation in certain countries, we are keenly focused on our delivered employee experience.
Removed
By nurturing an inclusive and high-performing culture, we attract, retain, and reward outstanding talent, providing employees with meaningful work and opportunities for personal and professional growth. Oversight and Governance Our board of directors, along with the Compensation and Talent Committee, oversees our human capital management as well as our diversity, equity, and inclusion initiatives.
Added
Talent Acquisition, Learning and Development, Belonging, Engagement & Retention In 2025, we implemented a more formalized strategic workforce planning methodology building plans across the enterprise to recruit, develop and deploy the talent needed to build the solutions and services that will power SPS’s future growth.
Removed
They receive consistent updates from our Chief Human Resources Officer about key strategic initiatives and other significant human resources matters, which include hiring, development, retention, employee engagement, succession planning, compensation and benefits, and risks associated with human resources.
Added
SPS strengthened its global talent pipeline in 2025, attracting and retaining critical skills aligned to our strategic capabilities - including technology, customer success, and go-to-market execution. 90% of hires supported these priority areas. We invested in employer branding, global recruiting infrastructure, and early-career programs to expand reach and help SPS continue to attract top talent to drive business growth.
Removed
Our People As of December 31, 2024, we had a total of 2,783 employees worldwide, including 1,355 in cost of revenues, 733 in sales and marketing, 461 in research and development, and 234 in general and administrative. 82% are based in North America with the remaining in Europe and Asia Pacific.
Added
In 2025, as part of a multi-year learning culture transformation, we introduced a new Learning and Development strategy, one that builds a learning culture, delivers learning experiences in the flow of work and empowers employees to take ownership of their professional and career growth.
Removed
The majority of our employees are engaged on a full-time basis. We also utilize third-party agencies for staff augmentation to enhance our operations. While we have statutory obligations for employee representation in certain countries, none of our U.S. employees are unionized. 38% of our global workforce identify as female and 2% did not specify their gender.
Added
In furtherance of that strategy, we deployed an artificial intelligence ("AI")-enabled learning platform that provides our employees with visibility to in-demand skills and offers personalized learning content supporting their professional development and helping SPS develop the skills and capabilities key to driving our business strategy.
Removed
Belonging@SPS We power connections that drive the world of commerce forward, and our success depends on making strong decisions, fostering innovation, delivering unparalleled customer solutions, and driving outstanding business performance. We achieve this by creating an environment where every employee feels a true sense of belonging.
Added
At SPS we maintain a strong commitment to Belonging, helping everyone feel accepted, valued, and empowered to make a meaningful impact. Our company’s core value of “Employees First” clearly states our commitment and we are measuring employee perceptions related to Belonging through our employee listening program. That commitment is evident in our workforce, recruiting efforts and our community engagement.
Removed
We are committed to creating an environment where everyone feels welcomed, valued, and empowered to contribute meaningfully. In 2024, we launched Belonging@SPS as a thoughtful update to our diversity, equity, inclusion, and belongin g ("DEI(B)") statement and strategy. This initiative was shaped by employee feedback, designed to better reflect our core values, and tailored to ensure global relevance.
Added
SPS has actively engaged Employee Resources Groups, each sponsored by a business executive and open to all employees, providing employees a forum to share their ideas to continually improve the employee experience and build community bridges. We have relationships with the Wallin Education Partners and a Diverse Scholar Program that supports diverse college students pursuing careers in technology.
Removed
We bring this commitment to life by embedding it into our human resources processes and integrating it into our talent strategies. Our Employee Resource Groups ("ERGs"), a core part of our Belonging@SPS commitment, foster employee connections across the globe, and provide learning, engagement, and community-building for all SPS Commerce employees.
Added
In addition to receiving funding for their education, participants are offered internships, have access to mentorship and are connected to business professionals across our organization. In 2025, we strengthened our community engagement by launching Commerce with Purpose, an inclusive sourcing and community impact initiative focused on building partnerships with diverse vendors operating in the communities where we live and work.
Removed
We added two new ERGs in 2024, the Disability Empowerment Network and A+ (Asian, Native Hawaiian & Pacific Islanders). All employees are encouraged to participate in one or more of our ERGs, which also include our Black Business Resource Group, the LGBTQ+ Group, and Women in Tech.
Added
We also launched Let’s Chat SPS in 2025, a global employee connection program to foster meaningful relationships across Team SPS. These actions continue to build on our Belonging@SPS program and strengthen our foundation for sustainable growth. To retain the talent we work hard to attract, we regularly survey our employees.
Removed
SPS COMMERCE, INC. 9 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents We have taken meaningful steps to advance our commitment to diversity and inclusion by collaborating with local organizations that support underrepresented communities, including individuals with disabilities and those who are neurodiverse.
Added
The insights we gain deepen our understanding of their perspectives and our opportunities to improve their experience. In 2025, we conducted an Organizational Health and Culture survey focused on both the employee experience and organization culture.
Removed
Through these partnerships, we gain valuable insights into equipping our workplace with the tools and resources needed for every employee to succeed. Furthermore, our Talent Acquisition team has a focus area on recruiting individuals with disabilities and neurodiverse candidates, fostering an inclusive hiring process from initial recruitment to onboarding and ongoing professional development.
Added
We see both as critical enablers of our business strategy, our ability to meet the needs of our customers, and our ability to attract and retain the necessary talent.
Removed
Since 2021, all new hires have participated in an interactive inclusion curriculum. In 2024, we refreshed our new employee Belonging@SPS onboarding experience to identity awareness and belonging, focused on creating a safe work environment where employees feel comfortable bringing their full authentic selves to the workplace. Additionally, we continue to provide all managers with resources to support building inclusive teams.
Added
SPS COMMERCE, INC. 9 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Total Rewards, Governance & Oversight and Well-Being Well-Being At SPS, we believe that a sense of well-being is the result of our employees feeling balanced, resilient and energized resulting in high performance and critical talent retention.

… 30 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

34 edited+16 added−4 removed133 unchanged
Biggest changeEconomic weakness and constrained retail spending may result in slower growth, or reductions, in revenues and gross profits in the future. We have experienced, and may experience in the future, reduced spending in our business due to financial turmoil affecting the U.S. and global economy, and other macroeconomic factors affecting spending behavior.
Biggest changeWe have experienced, and may experience in the future, reduced spending in our business due to financial turmoil affecting the U.S. and global economy, and other macroeconomic factors affecting spending behavior, such as tariffs. Uncertainty about future economic conditions increases the difficulty of forecasting operating results and making decisions about future investments.
While we have established standards for the use of open source software in our products, processes and technology to ensure that open source software is not used in such a way as to require us to disclose the source code to the related product or products, such use could inadvertently occur.
While we have established standards for the use of open source software in our products, processes and technology designed to ensure that open source software is not used in such a way as to require us to disclose the source code to the related product or products, such use could inadvertently occur.
Acquisitions involve numerous risks including: • incurring significantly higher than anticipated capital expenditures and operating expenses; • failing to assimilate the operations, customers, and personnel of the acquired company or business; • disrupting our ongoing business; • dissipating or distracting our management resources; • dilution to existing stockholders from the issuance of equity securities; • liabilities or other problems associated with the acquired business; • becoming subject to adverse tax consequences, substantial depreciation, or deferred compensation charges; • compliance with laws and regulations and exposure to other contingent liabilities; • retaining key management of the acquired company; • failing to maintain uniform standards, controls, and policies; and SPS COMMERCE, INC. 14 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents • impairing relationships with employees and customers as a result of changes in management.
Acquisitions involve numerous risks including: • incurring significantly higher than anticipated capital expenditures and operating expenses; • failing to assimilate the operations, customers, and personnel of the acquired company or business; • disrupting our ongoing business; • dissipating or distracting our management resources; • dilution to existing stockholders from the issuance of equity securities; • liabilities or other problems associated with the acquired business; • becoming subject to adverse tax consequences, substantial depreciation, or deferred compensation charges; • compliance with laws and regulations and exposure to other contingent liabilities; SPS COMMERCE, INC. 13 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents • retaining key management of the acquired company; • failing to maintain uniform standards, controls, and policies; and • impairing relationships with employees and customers as a result of changes in management.
SPS COMMERCE, INC. 22 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents General Our failure to maintain adequate internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 or to prevent or detect material misstatements in our annual or interim financial statements in the future could result in inaccurate financial reporting, or could otherwise harm our business and investor confidence in our financial reporting.
SPS COMMERCE, INC. 21 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents General Our failure to maintain adequate internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 or to prevent or detect material misstatements in our annual or interim financial statements in the future could result in inaccurate financial reporting, or could otherwise harm our business and investor confidence in our financial reporting.
We intend to grow our business by retaining and attracting talent, developing strategic relationships with resellers, including resellers that incorporate our applications in their offerings, and increasing our marketing activities.
We intend to grow our business by retaining and attracting talent, developing strategic relationships with channel partners, including resellers that incorporate our applications in their offerings, and increasing our marketing activities.
SPS COMMERCE, INC. 16 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Our business is dependent on our ability to maintain and scale our technical infrastructure, and any failure to effectively maintain or scale such infrastructure could damage our reputation, result in a potential loss of revenue, and adversely affect our financial results.
SPS COMMERCE, INC. 15 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Our business is dependent on our ability to maintain and scale our technical infrastructure, and any failure to effectively maintain or scale such infrastructure could damage our reputation, result in a potential loss of revenue, and adversely affect our financial results.
Given the interconnected and technology-dependent nature of the retail supply chain, our significant presence and impact in the retail industry, and past cyber events affecting our systems, it's reasonable to believe that we are a target for such attacks.
Given the interconnected and technology-dependent nature of the retail supply chain, our significant presence and impact in the retail industry, and past cyber events affecting our systems, it is reasonable to believe that we are a target for such attacks.
Fluctuations in our results of operations may be due to a number of factors, including, but not limited to, those listed below and identified throughout this “Risk Factors” section: • our ability to retain and increase sales to customers and attract new customers, including our ability to maintain and increase our number of recurring revenue customers; • the timing and success of introductions of new products or upgrades by us or our competitors; • the strength of the U.S. and global economy, in particular, as it affects the U.S. retail sector; • the financial condition of our customers; • changes in our pricing policies or those of our competitors; SPS COMMERCE, INC. 21 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents • competition, including entry into the industry by new competitors; • the amount and timing of our expenses, including stock-based compensation and expenditures related to expanding our operations, attracting and retaining talent, supporting new customers, performing research and development, or introducing new products; • changes in laws and regulations impacting our business; • regulatory compliance costs and unforeseen legal expenses, including litigation and settlement costs; • the timing, size, integration and operational success of potential future acquisitions; • changes in the payment terms for our products; and • system or service failures, security breaches or network downtime.
Fluctuations in our results of operations may be due to a number of factors, including, but not limited to, those listed below and identified throughout this “Risk Factors” section: • our ability to retain and increase sales to customers and attract new customers, including our ability to maintain and increase our number of recurring revenue customers; • the timing and success of introductions of new products or upgrades by us or our competitors; • the strength of the U.S. and global economy, in particular, as it affects the U.S. retail sector; • the financial condition of our customers; • changes in our pricing policies or those of our competitors; • competition, including entry into the industry by new competitors; • the amount and timing of our expenses, including stock-based compensation and expenditures related to expanding our operations, attracting and retaining talent, supporting new customers, performing research and development, or introducing new products; • changes in laws and regulations impacting our business; • regulatory compliance costs and unforeseen legal expenses, including litigation and settlement costs; • the timing, size, integration and operational success of potential future acquisitions; • changes in the payment terms for our products; and • system or service failures, security breaches or network downtime.
Violations of these laws may result in severe civil and criminal sanctions and penalties, which could disrupt our business and have a material adverse effect on our reputation, results of operations or financial condition.
Violations of these laws may result in severe civil and criminal sanctions and penalties, which could disrupt our business and have a material adverse effect on our reputation, results of operations or financial condition. Any unrest, military activities, or sanctions impacting our international operations, should they occur, could disrupt operations, and have a material adverse effect on our business.
We believe that proprietary technology is essential to establishing and maintaining our leadership position. We seek to protect our intellectual property through trade secrets, copyrights, confidentiality, non-compete and nondisclosure agreements, license agreements, trademarks, domain names and other measures, some of which afford only limited protection. We do not have any registered copyrights.
We seek to protect our intellectual property through trade secrets, copyrights, confidentiality, non-compete and nondisclosure agreements, license agreements, trademarks, patents, domain names and other measures, some of which afford only limited protection. We do not have any registered copyrights.
Other factors that may limit market acceptance of our cloud-based supply chain management products include: • our ability to maintain high levels of customer satisfaction; • our ability to maintain continuity of service for all users of our cloud-based products; SPS COMMERCE, INC. 13 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents • the price, performance, and availability of competing products, both new and existing; and • our ability to address customers’ confidentiality and security concerns about information stored within our cloud-based products.
Other factors that may limit market acceptance of our cloud-based supply chain management products include: • our ability to maintain high levels of customer satisfaction; • our ability to maintain continuity of service for all users of our cloud-based products; • the price, performance, and availability of competing products, both new and existing; and • our ability to address customers’ confidentiality and security concerns about information stored within our cloud-based products.
In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S. and intellectual property protections may also be unavailable, limited or difficult to enforce in some countries, which could make it easier for competitors to capture market share.
In SPS COMMERCE, INC. 18 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S. and intellectual property protections may also be unavailable, limited or difficult to enforce in some countries, which could make it easier for competitors to capture market share.
An alternative workforce location may be more expensive to train, staff, and operate and may cause delays and shortfalls in programming deliverables and services, thus potentially harming our business.
Any such disruption to our operations may be prolonged and require a transition to alternative workforce locations. An alternative workforce location may be more expensive to train, staff, and operate and may cause delays and shortfalls in programming deliverables and services, thus potentially harming our business.
If these defects lead to service failures, we could experience delays or lost revenues, diversion of technology resources, negative media attention or increased service costs as a result of performance-based claims during the period required to correct the cause of the defects.
If these defects lead to service failures, we could experience delays or lost revenues, diversion of technology resources, negative media attention or increased service costs SPS COMMERCE, INC. 17 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents as a result of performance-based claims during the period required to correct the cause of the defects.
Existing products can become obsolete and unmarketable when vendors introduce products utilizing new technologies or new industry standards emerge, and as a result, it is difficult for us to predict the life cycles of our products.
The industry in which we compete is characterized by rapid technological change, frequent introductions of new products, evolving industry standards, and advancements in AI-existing products can become obsolete and unmarketable when vendors introduce products utilizing new technologies or new industry standards emerge, and as a result, it is difficult for us to predict the life cycles of our products.
As demonstrated by the frequency and sophistication of material and high-profile data security breaches across industries, computer malware, viruses, phishing, spam, ransomware, and other cyber threats continue to pose a pervasive issue for business.
Additionally, the growing costs to avoid or reduce the risks of such a failure could adversely affect our results of operations. As demonstrated by the frequency and sophistication of material and high-profile data security breaches across industries, computer malware, viruses, phishing, spam, ransomware, and other cyber threats continue to pose a pervasive issue for business.
We may not have sufficient resources to continue the investments in all areas of software development, marketing, customer service and support and infrastructure needed to maintain our competitive position which may diminish our market share and business prospects.
We may not have sufficient resources to continue the investments in all areas of software development, marketing, customer service and support and infrastructure needed to maintain our competitive position which may diminish our market share and business prospects. Adopting and utilizing AI and Machine Learning ("ML")-enabled products or services has become increasingly important within our competitive landscape.
In addition to government activity, privacy advocacy and other industry groups have established or may establish new self-regulatory standards that may place additional burdens on us. Our customers may expect us to meet voluntary certification or other standards established by third parties.
In addition to government activity, privacy advocacy and other industry groups have established or may establish new self-regulatory standards that may place additional burdens on us. Our customers may expect us to meet voluntary SPS COMMERCE, INC. 19 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents certification or other standards established by third parties.
If a significant number of recurring revenue customers seek to terminate their relationship with us, our business, results of operations and financial condition would be adversely affected in a short period of time.
If a significant number of recurring revenue customers seek to terminate their relationship with us, our business, results of operations and financial condition would be adversely affected in a short period of time. Economic weakness and uncertainty could adversely affect our revenue, lengthen our sales cycles, and make it more difficult for us to forecast operating results accurately.
SPS COMMERCE, INC. 20 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Regulation Privacy concerns and laws, evolving regulation of the internet and cloud computing, cross-border data transfer restrictions and other domestic or foreign regulations may limit the use and adoption of our products and adversely affect our business.
Regulation Privacy concerns and laws, evolving regulation of the internet and cloud computing, cross-border data transfer restrictions and other domestic or foreign regulations may limit the use and adoption of our products and adversely affect our business.
Business If we are unable to attract new customers, or sell additional products to existing customers, or if our customers do not increase their use of our products, our revenue growth and profitability will be adversely affected.
SPS COMMERCE, INC. 10 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Business If we are unable to attract new customers, or sell additional products to existing customers, or if our customers do not increase their use of our products, our revenue growth and profitability will be adversely affected.
We use third-party data centers, located in the U.S. and internationally, as well as provision services from cloud providers, to conduct our operations. Our ability to deliver our services depends on the development and maintenance of telecommunications infrastructure by third parties. This includes maintenance of a reliable network backbone with the necessary speed, data capacity, bandwidth capacity, and security.
Our ability to deliver our services depends on the development and maintenance of telecommunications infrastructure by third parties. This includes maintenance of a reliable network backbone with the necessary speed, data capacity, bandwidth capacity, and security.
Uncertainty about future economic conditions increases the difficulty of forecasting operating results and making decisions about future investments. In addition, economic conditions or uncertainty may cause customers and potential customers to reduce or delay technology purchases, including purchases of our products.
In addition, economic conditions or uncertainty may cause customers and potential customers to reduce or delay technology purchases, including purchases of our products and solutions.
Technology products like ours may contain undetected defects in the hardware, software, infrastructure, third-party components or processes that are part of the products we provide.
We may experience service failures or interruptions due to defects in the hardware, software, infrastructure, third-party components or processes that comprise our existing or new products, any of which could adversely affect our business. Technology products like ours may contain undetected defects in the hardware, software, infrastructure, third-party components or processes that are part of the products we provide.
Our charter documents and Delaware law may delay, discourage, or inhibit a takeover that stockholders consider favorable.
If this occurs, the trading price of our common stock could decline significantly. Our charter documents and Delaware law may delay, discourage, or inhibit a takeover that stockholders consider favorable.
If we fail to attract, retain, and train members of our senior management team and other key personnel, our business could be adversely affected.
SPS COMMERCE, INC. 11 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents If we fail to attract, retain, and train members of our senior management team and other key personnel, our business could be adversely affected.
This could harm our intellectual property position and have a material adverse effect on our business, results of operations and financial condition. SPS COMMERCE, INC. 19 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents If we fail to protect our intellectual property and proprietary rights adequately, our business could suffer material adverse effects.
This could harm our intellectual property position and have a material adverse effect on our business, results of operations and financial condition. If we fail to protect our intellectual property and proprietary rights adequately, our business could suffer material adverse effects. We believe that proprietary technology is essential to establishing and maintaining our leadership position.
Our operating results in one or more future quarters may fluctuate, fall below the expectations of securities analysts and investors, or be less than any guidance we may provide to the market. If this occurs, the trading price of our common stock could decline significantly.
SPS COMMERCE, INC. 20 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Our operating results in one or more future quarters may fluctuate, fall below the expectations of securities analysts and investors, or be less than any guidance we may provide to the market.
A failure to protect the confidentiality and integrity of our customers’ information and prevent cyber-attacks could materially damage our reputation, expose us to claims and litigation, and lead to service disruptions and harm our business. Additionally, the growing costs to avoid or reduce the risks of such a failure could adversely affect our results of operations.
SPS COMMERCE, INC. 16 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents A failure to protect the confidentiality and integrity of our customers’ information and prevent cyber-attacks could materially damage our reputation, expose us to claims and litigation, and lead to service disruptions and harm our business.
In the event that we believe, or have reason to believe, that our employees or agents have or may have violated applicable anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management.
In the event that we believe, or have reason to believe, that our employees or agents have or may have violated applicable anti-corruption laws, including the U.S.
Increased competition could reduce our market share, revenues, and operating margins, increase our costs of operations, and otherwise adversely affect our business. To remain competitive, we will need to invest continuously in software development, marketing, customer service and support, product delivery and other cloud-based network infrastructure.
Increased competition could reduce our market share, revenues, and operating margins, increase our costs of operations, and otherwise adversely affect our business.
SPS COMMERCE, INC. 17 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Interruptions or delays from third-party data centers or to the telecommunications infrastructure we use or rely on could impair the delivery of our products and our business could suffer.
Interruptions or delays from third-party data centers or to the telecommunications infrastructure we use or rely on could impair the delivery of our products and our business could suffer. We use third-party data centers, located in the U.S. and internationally, as well as provision services from cloud providers, to conduct our operations.
We may not be able to successfully integrate or otherwise operate newly acquired companies or businesses, which could adversely affect our financial results.
Furthermore, the use of AI/ML-enabled products and services in business operations carries inherent risks to data privacy and security, such as unintended or inadvertent transmission of proprietary or sensitive information. We may not be able to successfully integrate or otherwise operate newly acquired companies or businesses, which could adversely affect our financial results.
Our inability to adapt to rapid technological change could impair our ability to remain competitive. The industry in which we compete is characterized by rapid technological change, frequent introductions of new products, and evolving industry standards, which may include advancements in artificial intelligence.
Our inability to adapt to rapid technological change could impair our ability to remain competitive.
Removed
SPS COMMERCE, INC. 12 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Economic weakness and uncertainty could adversely affect our revenue, lengthen our sales cycles, and make it more difficult for us to forecast operating results accurately. Our revenues depend significantly on general economic conditions and the sustainability and health of retailers.
Added
Our revenues depend significantly on general economic conditions and the sustainability and health of retailers. Economic weakness and constrained retail spending may result in slower growth, or reductions, in revenues and gross profits in the future.
Removed
Further, we announced the retirement of our President and Chief Operating Officer, James Frome, effective December 31, 2024. Leadership transitions and management changes involve inherent risks, can be difficult to manage, and may cause uncertainty or a disruption, which could adversely affect our business.
Added
SPS COMMERCE, INC. 12 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents To remain competitive, we will need to invest continuously in software development, marketing, customer service and support, product delivery and other cloud-based network infrastructure.
Removed
SPS COMMERCE, INC. 15 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Any unrest, military activities, or sanctions impacting our international operations, should they occur, could disrupt operations, and have a material adverse effect on our business. Any such disruption to our operations may be prolonged and require a transition to alternative workforce locations.
Added
Such adoption and utilization may expose us to social, ethical, operational and regulatory risks that could result in reputational harm, liability and adverse financial results. We incorporate AI/ML technologies into our internal operations and into our products and services, and may further expand such use over time.
Removed
SPS COMMERCE, INC. 18 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents We may experience service failures or interruptions due to defects in the hardware, software, infrastructure, third-party components or processes that comprise our existing or new products, any of which could adversely affect our business.
Added
As a result, we face a range of risks associated with the development, deployment, integration, and use of AI/ML technologies.
Added
If we fail to develop, deploy, or integrate AI/ML technologies in a timely, effective, and cost-efficient manner, we may fall behind competitors, resulting in the loss of competitive efficiencies, reduced innovation, diminished market share, slower growth trajectories, or missed opportunities within an increasingly AI/ML-driven global landscape.
Added
At the same time, the adoption and use of AI/ML technologies may expose us to social and ethical risks, operational challenges, increased costs, or outcomes that are inaccurate, unreliable, or otherwise not aligned with customer expectations, which could result in reputational harm, liability, or technology that is not cost-effective.
Added
Further, the regulatory environment regarding AI/ML is evolving and may result in increased liability related to our use of AI/ML technologies and the use or misuse of AI/ML-enabled products and services by our customers or other third parties, including potential liability regarding intellectual property or privacy laws, increase compliance costs and result in inconsistencies in evolving legal frameworks across jurisdictions.
Added
As we strive to exceed our customer expectations by adopting and delivering AI/ML-enabled products and services, ineffective or inadequate deployment or governance may result in incidents that impair the acceptance of the AI/ML-enabled products and services, result in our products and services not working as intended or producing unexpected outcomes or cause brand or reputational harm.
Added
Our AI/ML-enabled products and services, as well as third-party AI/ML technologies, models, or tools that we integrate, rely upon, or make available to customers, may not perform as intended or may interact unpredictably with other AI/ML systems. AI-enabled products and services are known to experience issues such as hallucinations, data leakage, and harmful prompt injections.
Added
We may not be able to anticipate, prevent, or promptly remediate all such issues, including where they arise from customer-provided inputs or third-party AI/ML technologies. Our innovation and development efforts may be unsuccessful in identifying or resolving issues before they arise, subjecting us to additional compliance requirements, regulatory action, competitive harm or legal liability.
Added
We may also face risks arising from the use or misuse of our AI/ML-enabled products and services by customers or other third parties in ways that are inconsistent with applicable laws, contractual restrictions, or our acceptable use policies, which could expose us to reputational harm, regulatory scrutiny, or liability, even where such conduct is outside of our direct control.
Added
Foreign Corrupt Practices Act, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require SPS COMMERCE, INC. 14 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents significant time and attention from senior management.
Added
The incorporation of AI/ML into our products and services, as well as the use of third-party service providers, and other AI/ML -enabled technologies within our business may create additional cybersecurity risks or increase cybersecurity risks, including risks of security breaches and incidents.
Added
Further, AI/ML technologies may be used for certain cybersecurity attacks, and may increase their frequency and intensity, resulting in heightened risks of security breaches and incidents.
Added
Security incidents affecting ours or our third-party service provider’s information technology systems that compromise the confidentiality, integrity, and availability of our data could result from AI related sensitive data exposure such as insufficient data anonymization during the training process, data poisoning, system misconfiguration, or from cyber-attacks, including, but not limited to, denial-of-service attacks, model or algorithm exploitation or reverse engineering of AI algorithms, web scraping, ransomware attacks, business email compromises, computer malware, viruses, and social engineering (including phishing), which are prevalent in our industry and our customers’ industries.
Added
We implemented new enterprise resource planning (“ERP”) systems to replace legacy systems that were used for certain transaction processing and financial reporting activities. The transition required significant changes to our internal controls, and challenges during implementation could have adversely affected those controls and heightened the risk of material misstatement.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed11 unchanged
Biggest changeSPS COMMERCE, INC. 23 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents While we have experienced cybersecurity incidents and expect to continue to be subject to such incidents, to date, we have not experienced any cybersecurity incidents that have materially affected our business, financial condition, or results of operations.
Biggest changeSPS COMMERCE, INC. 22 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents While we have experienced cybersecurity incidents and expect to continue to be subject to such incidents, to date, we have not experienced any cybersecurity incidents that have materially affected our business, financial condition, or operations.
Item 1C. Cybersecurity Risk Management and Strategy We have an established security program and framework based on ISO/IEC 27001 (“Security Program”) and maintain ISO/IEC 27001:2013, SOC 1 Type 2, and SOC 2 Type 2 certifications.
Item 1C. Cybersecurity Risk Management and Strategy We have an established security program and framework based on ISO/IEC 27001 (“Security Program”) and maintain ISO/IEC 27001:2022, SOC 1 Type 2, and multiple SOC 2 Type 2 certifications.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeItem 2. Properties Our corporate headquarters, including our principal administrative, marketing, sales, technical support, and research and development facilities, are located in Minneapolis, Minnesota. This location includes approximately 200,000 square feet of space and is under lease through 2027. We lease other smaller facilities across the U.S. and international locations.
Biggest changeItem 2. Properties Our corporate headquarters, including our principal administrative, marketing, sales, technical support, and research and development facilities, are located in Minneapolis, Minnesota. This location includes approximately 198,000 square feet of space and is under lease through 2043. We lease other smaller facilities across the U.S. and international locations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+3 added−0 removed5 unchanged
Biggest changeSPS COMMERCE, INC. 25 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers On July 23, 2024 (announced July 25, 2024), our board of directors authorized a program to repurchase up to $100.0 million of our common stock, excluding costs to obtain.
Biggest changeSPS COMMERCE, INC. 24 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers The share repurchase activity for the quarter ended December 31, 2025, was as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet be Purchased Under the Program October 1 - 31, 2025 32,666 $ 106.79 32,666 $ 6,525,000 November 1 - 30, 2025 80,535 80.90 80,535 10,000 December 1 - 31, 2025 171,332 87.55 171,332 85,000,000 Total 284,533 $ 87.88 284,533 $ 85,000,000 On July 23, 2024 (announced July 25, 2024), our Board of Directors authorized a program to repurchase up to $100.0 million of our common stock, excluding costs to obtain.
For more information regarding our share repurchase programs, refer to Note J to our consolidated financial statements, included in Part II Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
For more information regarding our share repurchase programs, refer to Note J of our consolidated financial statements, included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
The return assumes that $100 was invested in shares of our common stock and the other indexes at the close of market on December 31, 2019, and that dividends, if any, were reinvested. The comparison in this graph is based on historical data and is not intended to forecast or be indicative of future performance of our common stock.
The return assumes that $100 was invested in shares of our common stock and the other indexes at the close of market on December 31, 2020, and that dividends, if any, were reinvested. The comparison in this graph is based on historical data and is not intended to forecast or be indicative of future performance of our common stock.
The graph below compares the cumulative total stockholder return of our common stock with that of the Russell 1000 Index and the Nasdaq Computer Index from December 31, 2019 through December 31, 2024, utilizing the last trading day of each respective year.
The graph below compares the cumulative total stockholder return of our common stock with that of the Russell 1000 Index and the Nasdaq Computer Index from December 31, 2020 through December 31, 2025, utilizing the last trading day of each respective year.
Stockholders of Record - As o f February 11, 2025, we had 71 stockholders of record of our common stock, excluding holders whose stock is held either in nominee name and/or street name brokerage accounts. Dividends - We have not declared or paid cash dividends on our common stock.
Stockholders of Record - As o f February 12, 2026, we had 106 stockholders of record of our common stock, excluding holders whose stock is held either in nominee name and/or street name brokerage accounts. Dividends - We have not declared or paid cash dividends on our common stock.
Under the program, purchases may be made from time to time in the open market or in privately negotiated purchases, or both. The new share repurchase program became effective August 23, 2024 and expires on July 24, 2026. We did not make any repurchases under the program during the quarter ended December 31, 2024.
Under the programs, purchases may be made from time to time in the open market or in privately negotiated purchases, or both.
Added
Securities Authorized for Issuance Under Equity Compensation Plans - The information required by this Item concerning equity compensation plans is incorporated herein by reference to Item 12 of this report.
Added
The share repurchase program became effective August 23, 2024 and expires on July 24, 2026. On October 29, 2025 (announced October 30, 2025), our Board of Directors authorized a program to repurchase up to $100.0 million of our common stock, excluding costs to obtain. The share repurchase program became effective December 1, 2025 and expires on December 1, 2027.
Added
On February 10, 2026 (announced February 12, 2026), our Board of Directors approved an additional $200.0 million in repurchase authority under the share repurchase program that was approved on October 29, 2025 and discussed above, for a total authorized repurchase amount of $300.0 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

35 edited+10 added−4 removed39 unchanged
Biggest changeSPS COMMERCE, INC. 33 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Contractual and Commercial Commitment Summary Our contractual obligations and commercial commitments as of December 31, 2024 are summarized below: Payments Due by Period (in thousands) Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total Operating lease obligations, including imputed interest $ 5,952 $ 6,916 $ 225 $ 48 $ 13,141 Purchase commitments 14,187 4,160 — — 18,347 Total $ 20,139 $ 11,076 $ 225 $ 48 $ 31,488 Future Capital Requirements Our future capital requirements may vary significantly from those now planned and will depend on many factors, including: • costs to develop and implement new products and applications, if any; • sales and marketing resources needed to further penetrate our market and gain acceptance of new products and applications that we may develop; • expansion of our operations in the U.S. and internationally; • response of competitors to our products and applications; and • use of capital for acquisitions.
Biggest changeFuture Capital Requirements Our future capital requirements may vary significantly from those now planned and will depend on many factors, including: • costs to develop and implement new products and applications, if any; • sales and marketing resources needed to further penetrate our market and gain acceptance of new products and applications that we may develop; • expansion of our operations in the U.S. and internationally; • response of competitors to our products and applications; and • use of capital for acquisitions.
Amortization of Intangibles Assets - Amortization expense consists of the expense recognition of acquired intangible assets over their estimated useful lives. Other Income (Expense), net Other income (expense), net consists primarily of investment income, in addition to realized gain (loss) from investments held and realized gain (loss) from foreign currency impacts on cash and investments.
Amortization of Intangibles Assets - Amortization expense consists of the expense recognition of acquired intangible assets over their estimated useful lives. Other Income, net Other income, net consists primarily of investment income, in addition to realized gain (loss) from investments held and realized gain (loss) from foreign currency impacts on cash and investments.
Net income per share, the comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments.
Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The discussion of our liquidity and capital resources for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The discussion of our liquidity and capital resources for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
SPS COMMERCE, INC. 29 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Significant estimates in valuing certain intangible assets may include, but are not limited to, utilizing variants of the income approach, such as the relief-from-royalty and multi-period excess earnings methods, which estimate future expected cash flows from acquired customers and developed technology from a market participant perspective, useful lives, and discount rates.
SPS COMMERCE, INC. 28 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Significant estimates in valuing certain intangible assets may include, but are not limited to, utilizing variants of the income approach, such as the relief-from-royalty and multi-period excess earnings methods, which estimate future expected cash flows from acquired customers and developed technology from a market participant perspective, useful lives, and discount rates.
SPS COMMERCE, INC. 27 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Cost of Revenues and Operating Expenses Cost of Revenues - Cost of revenues consist primarily of personnel costs, stock-based compensation expense, and technology costs for our customer success and implementation teams, customer support personnel, and application support personnel, as well as amortization related to internally developed software.
SPS COMMERCE, INC. 26 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Cost of Revenues and Operating Expenses Cost of Revenues - Cost of revenues consist primarily of personnel costs, stock-based compensation expense, and technology costs for our customer success and implementation teams, customer support personnel, and application support personnel, as well as amortization related to internally developed software.
SPS COMMERCE, INC. 28 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation.
SPS COMMERCE, INC. 27 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation.
A s mall portion of our recurring revenue customers consist of separate units within a larger organization and are separately invoiced. We treat each of these units, which may include divisions, departments, affiliates and franchises, as distinct recurring revenue customers.
A small portion of our recurring revenue customers consist of separate units within a larger organization and are separately invoiced. We treat each of these units, which may include divisions, departments, affiliates and franchises, as distinct recurring revenue customers.
Income Tax Expense Income tax expense consists primarily of income taxes for U.S. federal jurisdiction in addition to income taxes for various state and international jurisdictions. Metrics and Non-GAAP Financial Measures Recurring Revenue - We define recurring revenue as active contracts during the reporting period to regularly pay us fees for subscription-based and reoccurring services.
Income Tax Expense Income tax expense consists primarily of income taxes for U.S. federal jurisdiction in addition to income taxes for various state and international jurisdictions. Metrics and Non-GAAP Financial Measures Recurring Revenue - We define recurring revenue as active contracts during the reporting period under which the customer regularly pays us fees for subscription-based and reoccurring services.
New recurring revenue customers do not have a meaningful contribution to revenue at the beginning of their tenure as our recurring revenue customer, and therefore a majority of the increased revenue was generated from existing recurring revenue customers.
New recurring revenue customers do not have a meaningful contribution to revenue at the beginning of their tenure, and therefore, a majority of the increased revenue was generated from existing recurring revenue customers.
Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.
Margin, the most directly comparable GAAP measure of financial performance, consists of net income divided by revenue.
The following are our recurring revenue streams: Fulfillment - Our Fulfillment product is a comprehensive solution designed to streamline supply chain operations. Our connections empower retailers, grocers, distributors, suppliers, manufacturers, and logistics firms to efficiently send and receive order data, ensuring accurate execution of required processes from order to invoicing and revenue recovery through fully automated operations.
The following are our recurring revenue streams: • Fulfillment - Our Fulfillment product offers a comprehensive solution designed to streamline supply chain operations. Our connections empower retailers, brands, distributors, manufacturers, and logistics providers to efficiently send and receive order data, ensuring accurate execution of required processes from order to invoicing and revenue recovery through fully automated operations.
Additionally, fluctuations in operating assets and liabilities resulted in a decrease of $3.1 million, driven by changes in the amount and timing of settlements and general growth of the business.
Additionally, fluctuations in operating assets and liabilities resulted in a decrease of $39.4 million, driven by changes in the amount and timing of settlements and general growth of the business.
The increase in revenue period-over-period resulted primarily from the increase in average recurring revenues per recurring revenue customer, which we also refer to as wallet share.
The increase in revenue period-over-period resulted from the increase in average recurring revenues per recurring revenue customer, which we also refer to as ARPU.
Financing Activities The increase in cash used in financing activities from the year ended December 31, 2024 to the year ended December 31, 2023 was primarily due to an increase in cash used for share repurchases of $37.6 million to continue to deliver shareholder value.
Financing Activities The increase in cash used in financing activities from the year ended December 31, 2024 to the year ended December 31, 2025 was primarily due to an increase in cash used for share repurchases of $76.7 million to continue to deliver shareholder value.
Statements of Cash Flows Summary The summary of activity within the consolidated statements of cash flows was as follows: Year Ended December 31, (in thousands) 2024 2023 Net cash provided by operating activities $ 157,398 $ 132,298 Net cash used in investing activities (110,454) (92,642) Net cash provided by (used in) financing activities (23,026) 15,970 Operating Activities The increase in cash provided by operating activities from the year ended December 31, 2024 to the year ended December 31, 2023 was primarily due to an increase in net income as adjusted for non-cash expenses, of $28.2 million, driven by continued growth in revenue, as partially offset by cash paid for expenses to operate the growing business.
Statements of Cash Flows Summary The summary of activity within the consolidated statements of cash flows was as follows: Year Ended December 31, (in thousands) 2025 2024 Net cash provided by operating activities $ 178,790 $ 157,398 Net cash used in investing activities (169,152) (110,454) Net cash used in financing activities (100,832) (23,026) Operating Activities The increase in cash provided by operating activities from the year ended December 31, 2024 to the year ended December 31, 2025 was primarily due to an increase in net income as adjusted for non-cash expenses, of $60.7 million, driven by continued growth in revenue, as partially offset by cash paid for expenses to operate the growing business.
Additionally, the revenue growth was attributable to an increase in recurring revenue customers, which is driven primarily by continued business growth and by business acquisitions. • Wallet share increased 15% to approximately $13,300 for the year ended December 31, 2024 from approximately $11,550 for the year ended December 31, 2023.
Additionally, the revenue growth was attributable to an increase in recurring revenue customers, which is driven primarily by continued business growth and business acquisitions. • ARPU increased 8% to approximately $14,350 for the year ended December 31, 2025 from approximately $13,300 for the year ended December 31, 2024 .
SPS COMMERCE, INC. 31 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents The following table provides a comparison of Margin to Adjusted EBITDA Margin: Year Ended December 31, (in thousands, except Margin and Adjusted EBITDA Margin) 2024 2023 Revenue $ 637,765 $ 536,910 Net income 77,054 65,824 Margin 12% 12% Adjusted EBITDA 186,631 157,630 Adjusted EBITDA Margin 29% 29% Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain or loss from investments held and foreign currency impact on cash and investments, other adjustments as necessary for a fair presentation, including for the year ended December 31, 2024 the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs , and for the year ended December 31, 2023 the expense impacts from disposals of certain capitalized internally developed software and acquisition-related employee severance costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period.
The following table provides a comparison of Margin to Adjusted EBITDA Margin: Year Ended December 31, (in thousands, except Margin and Adjusted EBITDA Margin) 2025 2024 Revenue $ 751,505 $ 637,765 Net income 93,339 77,054 Margin 12% 12% Adjusted EBITDA 231,367 186,631 Adjusted EBITDA Margin 31% 29% Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments held and foreign currency impact on cash and investments, other adjustments as necessary for a fair presentation, including for the year ended December 31, 2025 the expense impacts from disposals of certain capitalized internally developed software, disposals of other equipment, remeasurement of acquired earn-out payments, and one-time acquisition-related insurance costs , and for the year ended December 31, 2024 the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period.
Recurring revenues increased 20% to $600,089 for the year ended December 31, 2024, as compared to the same period in 2023, and accounted for 94% of our total revenues in 2024 and 2023.
Recurring revenues increased 20% to $718.0 million for the year ended December 31, 2025, as compared to the same period in 2024, and accounted for 96% and 94% of our total revenues in 2025 and 2024, respectively.
The following table provides a reconciliation of net income to non-GAAP income per share: Year Ended December 31, (in thousands, except per share amounts) 2024 2023 Net income $ 77,054 $ 65,824 Stock-based compensation expense 54,557 45,508 Amortization of intangible assets 23,510 16,116 Realized gain from investments held and foreign currency impact on cash and investments (115) (1,726) Other 1,064 1,198 Income tax effects of adjustments (24,505) (19,983) Non-GAAP income $ 131,565 $ 106,937 Shares used to compute net income and non-GAAP income per share Basic 37,306 36,646 Diluted 37,856 37,475 Net income per share, basic $ 2.07 $ 1.80 Non-GAAP adjustments to net income per share, basic 1.46 1.12 Non-GAAP income per share, basic $ 3.53 $ 2.92 Net income per share, diluted $ 2.04 $ 1.76 Non-GAAP adjustments to net income per share, diluted 1.44 1.09 Non-GAAP income per share, diluted $ 3.48 $ 2.85 SPS COMMERCE, INC. 32 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The discussion of our results from operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
The following table provides a reconciliation of net income to non-GAAP income per share: Year Ended December 31, (in thousands, except per share amounts) 2025 2024 Net income $ 93,339 $ 77,054 Stock-based compensation expense 53,728 54,557 Amortization of intangible assets 37,169 23,510 Realized gain from investments held and foreign currency impact on cash and investments (388) (115) Other 583 1,064 Income tax effects of adjustments (22,279) (24,505) Non-GAAP income $ 162,152 $ 131,565 Shares used to compute net income and non-GAAP income per share Basic 37,881 37,306 Diluted 37,992 37,856 Net income per share, basic $ 2.46 $ 2.07 Non-GAAP adjustments to net income per share, basic 1.82 1.46 Non-GAAP income per share, basic $ 4.28 $ 3.53 Net income per share, diluted $ 2.46 $ 2.04 Non-GAAP adjustments to net income per share, diluted 1.81 1.44 Non-GAAP income per share, diluted $ 4.27 $ 3.48 SPS COMMERCE, INC. 31 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The discussion of our results from operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Other adjustments for the year ended December 31, 2024 included the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs. Other adjustments for the year ended December 31, 2023 included the expense impacts from disposals of certain capitalized internally developed software and acquisition-related employee severance costs.
Other adjustments for the year ended December 31, 2025 included the expense impacts from disposals of certain capitalized internally developed software, disposals of other equipment, remeasurement of acquired earn-out payments, and one-time acquisition-related insurance costs.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2024, our principal sources of liquidity were cash and cash equivalents of $241.0 million and net accounts receivable of $52.0 million.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents of $151.4 million and net accounts receivable of $68.2 million.
Other Products - We provide several complementary products, such as: ◦ Assortment - Our Assortment product simplifies the communication of robust, accurate item data by automatically translating item attributes and hierarchies through a single connection across all sales channels. ◦ Community - Our Community product allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through proven change management, onboarding programs, and supplier score carding.
Our pre-built dashboards create custom reports, or integrate data with existing tools, to gain insights to enhance product performance, forecasting, pricing, and inventory management. • Other Products - We also have other complementary products, including: ◦ Assortment - Our Assortment product simplifies the communication of robust, accurate item data by automatically translating item attributes and hierarchies through a single connection across all sales channels. ◦ Relationship Management - Our Relationship Management product (formerly known as Community) allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through proven change management, onboarding programs, and supplier score carding.
Wallet Share - We calculate the annualized average recurring revenues per recurring revenue customer, which we also refer to as wallet share, by dividing the annualized recurring revenues for the period by the average of the beginning and ending number of recurring revenue customers for the period.
Annual Revenue Per User ("ARPU") - We calculate the annualized average recurring revenues per recurring revenue customer, which was previously referred to as “wallet share”, by dividing the annualized recurring revenues for the period by the average of the beginning and ending number of recurring revenue customers for the period.
The following table provides a reconciliation of net income to Adjusted EBITDA: Year Ended December 31, (in thousands) 2024 2023 Net income $ 77,054 $ 65,824 Income tax expense 22,422 19,739 Depreciation and amortization of property and equipment 18,721 18,631 Amortization of intangible assets 23,510 16,116 Stock-based compensation expense 54,557 45,508 Realized gain from investments held and foreign currency impact on cash and investments (115) (1,726) Investment income (10,582) (7,660) Other 1,064 1,198 Adjusted EBITDA $ 186,631 $ 157,630 Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue.
The following table provides a reconciliation of net income to Adjusted EBITDA: Year Ended December 31, (in thousands) 2025 2024 Net income $ 93,339 $ 77,054 Income tax expense 30,496 22,422 Depreciation and amortization of property and equipment 21,089 18,721 Amortization of intangible assets 37,169 23,510 Stock-based compensation expense 53,728 54,557 Realized gain from investments held and foreign currency impact on cash and investments (388) (115) Investment income (4,649) (10,582) Other 583 1,064 Adjusted EBITDA $ 231,367 $ 186,631 SPS COMMERCE, INC. 30 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue.
Additionally, there was an increase in software subscriptions of $4.0 million due to general growth of our business. Sales and Marketing Expenses - The increase in sales and marketing expense was primarily due to increased headcount, which resulted in increases of $17.6 million in personnel-related costs and $2.8 million in stock-based compensation expense.
Cost of Revenues - The increase in cost of revenues was primarily due to increased headcount, which resulted in an increase of $12.4 million in personnel-related costs and an increase in software subscriptions of $5.2 million due to general growth of our business.
Additionally, there was an increase of $3.9 million in product management costs. Research and Development Expenses - The increase in research and development expense was primarily due to increased headcount, which resulted in an increase of $9.0 million in personnel-related costs.
Research and Development Expenses - The increase in research and development expense was primarily due to increased headcount and third-party personnel, which resulted in an increase of $9.5 million in personnel-related costs, partially offset by $5.2 million due to higher capitalization of software development costs.
SPS COMMERCE, INC. 30 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents • Approximately 1,000 recurring revenue customers were added in September 2023 due to the acquisition of the existing customer base of TIE Kinetix.
SPS COMMERCE, INC. 29 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents • Approximately 50 1P recurring revenue customers were added in May 2024 due to the acquisition of the existing customer base of Traverse Systems LLC ("Traverse Systems") a nd a pproximately 200 1P recurring revenue customers were added in July 2024 due to the acquisition of the existing customer base of SupplyPike Inc.
We anticipate that the number of recurring revenue customers and wallet share will continue to increase as we execute our growth strategy focused on further penetration of our market. Cost of Revenues - The increase in cost of revenues was primarily due to increased headcount, which resulted in an increase of $22.5 million in personnel-related costs.
We anticipate that the number of recurring revenue customers and ARPU will continue to increase as we execute our growth strategy focused on further penetration of our market.
Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table presents our results of operations for the periods indicated: Year Ended December 31, 2024 2023 Change ($ in thousands) $ % of revenue (1) $ % of revenue (1) $ % Revenues $ 637,765 100 % $ 536,910 100 % $ 100,855 19 % Cost of revenues 210,714 33 182,069 34 28,645 16 Gross profit 427,051 67 354,841 66 72,210 20 Operating expenses Sales and marketing 148,920 23 122,936 23 25,984 21 Research and development 62,809 10 53,654 10 9,155 17 General and administrative 102,929 16 84,887 16 18,042 21 Amortization of intangible assets 23,510 4 16,116 3 7,394 46 Total operating expenses 338,168 53 277,593 52 60,575 22 Income from operations 88,883 14 77,248 14 11,635 15 Other income, net 10,593 2 8,315 2 2,278 27 Income before income taxes 99,476 16 85,563 16 13,913 16 Income tax expense 22,422 4 19,739 4 2,683 14 Net income $ 77,054 12 % $ 65,824 12 % $ 11,230 17 % (1) Amounts in column may not foot due to rounding Revenues - Revenues increased for the 96th consecutive quarter.
Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table presents our results of operations for the periods indicated: Year Ended December 31, 2025 2024 Change ($ in thousands) $ % of revenue (1) $ % of revenue (1) $ % Revenues $ 751,505 100 % $ 637,765 100 % $ 113,740 18 % Cost of revenues 231,629 31 210,714 33 20,915 10 Gross profit 519,876 69 427,051 67 92,825 22 Operating expenses Sales and marketing 169,130 22 148,920 23 20,210 14 Research and development 68,680 9 62,809 10 5,871 9 General and administrative 126,594 17 102,929 16 23,665 23 Amortization of intangible assets 37,169 5 23,510 4 13,659 58 Total operating expenses 401,573 53 338,168 53 63,405 19 Income from operations 118,303 15 88,883 14 29,420 33 Other income, net 5,532 1 10,593 2 (5,061) (48) Income before income taxes 123,835 16 99,476 16 24,359 24 Income tax expense 30,496 4 22,422 4 8,074 36 Net income $ 93,339 12 % $ 77,054 12 % $ 16,285 21 % (1) Amounts in column may not foot due to rounding Revenues - Revenues increased for the 100th consecutive quarter.
This was primarily attributable to increased usage of our products by our recurring revenue customers. • The number of recurring revenue customers increas ed 1% to approximately 45,350 at December 31, 2024 from approximately 44,800 at December 31, 2023 primarily due to sales and marketing efforts to acquire new customers and due to recent acquisitions.
This was primarily attributable to increased usage of our products by our recurring revenue customers, partially offset by the addition of 3P recurring revenue customers, which generally have lower ARPU. • The number of recurring revenue customers increas ed 20% to approximately 54,600 at December 31, 2025 from approximately 45,350 at December 31, 2024.
Investing Activities The increase in cash used in investing activities from the year ended December 31, 2024 to the year ended December 31, 2023 was primarily due to an increase in cash used to acquire businesses of $77.7 million to further grow our business, partially offset by an increase in cash provided by net maturities of investments of $60.2 million.
Investing Activities The increase in cash used in investing activities from the year ended December 31, 2024 to the year ended December 31, 2025 was primarily due to net cash inflow of $57.5 million from the maturities and purchases of investments during the year ended December 31, 2024.
Approximately 50 recurring revenue customers were added in May 2024 due to the acquisition of the existing customer base of Traverse Systems, and approximately 200 recurring revenue customers were added in July 2024 due to the acquisition of the existing customer base of SupplyPike.
("SupplyPike"). Additionally, approximately 8,500 recurring revenue customers were added in February 2025 due to the acquisition of the existing customer base of Carbon6, of which approximately 300 are 1P recurring revenue customers and the remainder are 3P recurring revenue customers.
General and Administrative Expenses - The increase in general and administrative expense was primarily due to increased headcount, which resulted in increases of $7.1 million in personnel-related costs and $3.5 million in stock-based compensation expense. Amortization of Intangible Assets - The increase in amortization of intangible assets was driven by increased intangible assets related to recent business acquisitions.
Sales and Marketing Expenses - The increase in sales and marketing expense was primarily due to increased headcount, which resulted in an increase of $14.9 million in personnel-related costs. Additionally, channel partner and referral fees increased by $3.9 million, primarily driven by the acquisition of Carbon6.
Other Income, Net - The increase was primarily due to increased investment income. Income Tax Expense - The increase in income tax expense was primarily driven by an increase in pre-tax income, partially offset by a decrease in nondeductible executive compensation and an increase in tax benefits from credits and foreign derived intangible income.
Income Tax Expense - The increase in income tax expense was primarily driven by the increase in pre-tax book income and reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price. The increase was partially offset with increased benefit for Research & Development tax credits.
Removed
Overview SPS Commerce is transforming how our global retail supply chain co-operates by creating a more dynamic, interconnected community where players can more freely connect, collaborate, and prosper together. Our comprehensive suite of cloud-based products and solutions lead the industry in establishing and maintaining stronger collaboration between retailers, grocers, distributors, suppliers, manufacturers, and logistics firms around the globe.
Added
Overview SPS Commerce is a global supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations. Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.
Removed
Our products enable customers to enhance how they operate: both within their organizations and with their trading partners, with reduced operational costs and stronger supply chain performance; compete: with order and supply chain visibility, sell-through data, and optimized inventory management, and; adapt: through the limitless access to connect and grow with the world’s largest retail network of trading partners that only SPS Commerce can offer.
Added
Our network powers our portfolio of solutions that orchestrate the critical processes, protocols, and data exchanges needed to get the right product, in the right place, at the right time, every time.
Removed
Our pre-built dashboards create custom reports, or integrate data with existing tools, to gain insights to enhance product performance, forecasting, pricing, and inventory management.
Added
We have embedded deep expertise, proven processes, and compliance logic built from over 20 years of commerce intelligence into every connection, delivering a full-service experience that empowers partners to move forward faster, together.
Removed
Net income is the comparable GAAP measure of financial performance.
Added
We classify the majority of our recurring revenue customers as '1P', with the exception of those recurring revenue customers that only have an online marketplace or e-Commerce connection within our network (which we refer to as '3P').
Added
Of the total recurring revenue customers at December 31, 2025, approximately 46,900 are 1P recurring revenue customers and the remainder are 3P recurring revenue customers. The increase in recurring revenue customers is primarily due to recent acquisitions of 3P recurring revenue customers.
Added
General and Administrative Expenses - The increase in general and administrative expense was primarily due to increased headcount and third-party personnel, which resulted in an increase of $15.2 million in personnel-related costs. Additionally, other items contributing to the increase related to costs for continued support of our growing operations including the closing and on-going integration of acquisitions.
Added
Amortization of Intangible Assets - The increase in amortization of intangible assets was driven by increased intangible assets related to recent business acquisitions. Other Income, N et - The decrease in other income, net was primarily due to a decrease in investment income.
Added
Other adjustments for the year ended December 31, 2024 included the expense impacts from disposals of certain capitalized internally developed software and one-time acquisition-related insurance costs. Net income is the most directly comparable GAAP measure of financial performance.
Added
SPS COMMERCE, INC. 32 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents Contractual and Commercial Commitment Summary Our contractual obligations and commercial commitments as of December 31, 2025 are summarized below: Payments Due by Period (in thousands) Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total Operating lease obligations (1) $ 4,668 $ (19,959) $ 5,844 $ 35,466 $ 26,019 Purchase commitments 11,030 5,779 1,452 — 18,261 Total $ 15,698 $ (14,180) $ 7,296 $ 35,466 $ 44,280 (1) Operating lease obligations include imputed interest and are presented net of lease incentives deemed payable at lease commencement.
Added
We expect to utilize approximately $23 million of the available lease incentives under the sixth amendment to our current headquarters lease during the year ending December 31, 2027, with the approximately remaining $9 million to be utilized thereafter.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−1 removed4 unchanged
Biggest changeWe may choose based on our investment strategy to hold cash, cash equivalents, and investments in interest-bearing or non-interest-bearing accounts.
Biggest changeWe may choose based on our investment strategy to hold cash, cash equivalents, and investments in interest-bearing or SPS COMMERCE, INC. 33 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents non-interest-bearing accounts.
During the last three years, inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. SPS COMMERCE, INC. 35 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents
During the last three years, inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. SPS COMMERCE, INC. 34 Form 10-K for the Annual Period ended December 31, 2025 Table of Contents
Based upon a sensitivity model, an immediate hypothetical 10% unfavorable change in all foreign currency exchange rates would have resulted in a $3.2 million impact on our cash and cash equivalents held in currencies other than the U.S. dollar as of December 31, 2024.
Based upon a sensitivity model, an immediate hypothetical 10% unfavorable change in all foreign currency exchange rates would have resulted in a $1.8 million impact on our cash and cash equivalents held in currencies other than the U.S. dollar as of December 31, 2025.
Based upon a sensitivity model , an immediate hypothetical 50-basis point change in interest rates at December 31, 2024 would have resulted in a $1.0 million impact on our investment income included in net income (loss) for the year ended December 31, 2024. We do not enter into investments for trading or speculative purposes.
Based upon a sensitivity model, an immediate hypothetical 50-basis point change in interest rates at December 31, 2025 would have resulted in a $0.6 million impact on o ur investment income included in net income for the year ended December 31, 2025. We do not enter into investments for trading or speculative purposes.
As of December 31, 2024, we maintained 13% of our total cash and cash equivalents in foreign currencies.
As of December 31, 2025 , we mai ntained 12% of our total cash and cash equivalents in foreign currencies.
SPS COMMERCE, INC. 34 Form 10-K for the Annual Period ended December 31, 2024 Table of Contents Foreign Currency Exchange and Inflation Risk Due to international operations, we have revenue, expenses, assets, and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Australian dollar, Canadian dollar, and Euro.
We did not have any variable interest rate outstanding debt as of December 31, 2025. Foreign Currency Exchange and Inflation Risk Due to international operations, we have revenue, expenses, assets, and liabilities that are denominated in currencies other than the U.S. dollar, primarily the Australian dollar, Canadian dollar, and Euro.
Removed
We did not have any variable interest rate outstanding debt as of December 31, 2024.

Other SPSC 10-K year-over-year comparisons