Supply chain software specialist SPS Commerce (SPSC +11.48%) finished July in style. On the last day of the month, its shares raced nearly 11% higher, thanks to a quarterly earnings report that impressed more than a few investors.
Bottom-line boom
SPS took the lid off its second-quarter figures after market close on Thursday. These revealed that the company's revenue rose by 6% year over year to $197.8 million. Net income not under generally accepted accounting principles (non-GAAP, or adjusted) came in at $46.4 million, or $1.27 per share. That was a robust 22% higher than the second-quarter 2025 result.
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It was also more than good enough to beat the average analyst estimate of $1.08 per share. SPS also topped the consensus pundit expectation for revenue, which was $195.4 million.
The company attributed its improvements to successful sales efforts and the benefits of harnessing artificial intelligence (AI) technology.
It quoted CFO Joe Del Preto as saying that the quarter's performance "reflects up-sell and cross-sell momentum across our core business. We continue to demonstrate operational rigor, exceeding our margin expansion goals while simultaneously rolling out our AI strategy across the SPS network."
NASDAQ: SPSC
Key Data Points
The right vendor at the right time
SPS proffered guidance for both the current (third) quarter and the entirety of 2026. For the year, it's modeling revenue of $788 million to $793 million, representing at least 5% growth. However, the company recently divested its 3P Revenue Recovery unit, which is forecast to negatively affect revenue in the second half by around $10.5 million.
As for profitability, adjusted net income should hit $4.84 to $4.93 per share.
On average, analysts estimate SPS' annual revenue at over $795 million and adjusted per-share net income at $4.74.
Retail stores and their suppliers are crucial components of SPS' ecosystem. Since they're experiencing volatility, the services SPS provides will likely move up the priority ladder. The company, with its strong recurring revenue base and high-margin business model, should continue to do well, and I'd be bullish on its future.
