SPS Commerce Q1 Earnings Call Highlights

Key Points

• SPS Commerce reported Q1 revenue of $192.1 million (+6% Y/Y), adjusted EBITDA of $57.9 million and $154 million in cash, using nearly all free cash flow to repurchase $47.1 million of shares under a board-authorized buyback program up to $300 million.

• Management said Amazon-related revenue recovery remains on a negative trajectory due to policy changes and expects the business to trough mid-to-late 2026; the company will roll out a $19.99/month subscription fee for very small 3P take-rate accounts and anticipates up to 4,000 3P supplier churn in 2026 without a material revenue impact.

• The firm is expanding AI with its beta agent MAX (400+ customers), which management says can protect customer revenue (one customer projects up to 8% protection from stockouts), drive internal efficiencies, and will be included with throttled usage in base subscriptions while monetizing MAX Connect over time.

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SPS Commerce (NASDAQ:SPSC) reported first-quarter 2026 results showing continued growth in its core operations, while management acknowledged ongoing pressure in the Amazon portion of its revenue recovery business. Revenue rose 6% year over year to $192.1 million, with recurring revenue up 7% and fulfillment revenue growth of 8%, executives said on the company’s earnings call.

On the call, management emphasized that evolving global trade dynamics—such as tariffs, geopolitics, and risk mitigation efforts—are increasing the need for real-time coordination across supply chains. The company also highlighted its ongoing push to apply AI across both customer-facing products and internal operations.

Quarterly results and customer metrics

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Chief Financial Officer Joe Del Preto, who joined SPS on March 16 and delivered his first earnings call in the role, said the company “report[ed] a solid first quarter of 2026,” noting that the “core business was strong and continued to show momentum throughout the quarter,” despite continued headwinds tied to Amazon revenue recovery.

Del Preto said total recurring revenue customers were approximately 54,200 in the quarter. He added that the number of 1P customers was flat sequentially, while 3P customers declined by 400, bringing the 3P pool to approximately 13,550.

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Adjusted EBITDA increased to $57.9 million, and SPS ended the quarter with $154 million in cash and cash equivalents. Del Preto also said the company used nearly 100% of free cash flow to repurchase $47.1 million of shares in the quarter, pointing to a board authorization of up to $300 million in total repurchases during a later Q&A exchange.

Amazon revenue recovery headwinds and pricing changes

Executives repeatedly pointed to Amazon-related pressure within revenue recovery. CEO Chad (as introduced on the call) said the company continues to “manage the headwinds from Amazon’s policy changes,” while Del Preto said the Amazon portion “continues on a negative trajectory.”

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To improve profitability among smaller accounts, SPS is introducing a subscription platform fee for certain 3P take-rate customers. Del Preto said the company expects this change to increase churn in that cohort, projecting a decline of up to 4,000 3P suppliers in 2026, but added, “We do not anticipate this action to result in a material impact to revenue.”

In response to a question from Stifel’s Parker Lane, Del Preto characterized the impacted accounts as “the very smallest of our 3P take rate only Amazon customers,” adding that they are “very, very low revenue customers.” He said the planned subscription fee is “quite modest at $19.99 a month,” but that some customers “don’t feel there’s enough volume there to pay” it. He also said SPS incurs costs to serve those accounts and could see cost benefits if some churn.

Management said the subscription fee rollout will begin in the second quarter and extend into the third quarter, though churn could occur throughout the year. Del Preto later told Baird’s Joe Vruwink that the guidance impact from the subscription fee change is expected to be “revenue neutral,” and that the company’s broader revenue recovery guidance reflects headwinds tied to Amazon policy changes affecting “the amount of [revenue] we can recover for our customers.”

Asked by Needham’s Ian Black when the Amazon-related 3P revenue recovery business might bottom, Del Preto said it “probably troughs somewhere in the middle of this year, towards the end of this year,” with “a little bit more momentum” as the company enters 2027, while still expecting “a lot of headwinds in 2026.”

AI initiatives and MAX beta highlights

Management highlighted customer adoption of MAX, SPS’s AI agent. The CEO said Siete Foods, a customer since 2018, has become an early adopter of MAX and is using it to diagnose issues such as shipment failures and invoice rejections and to identify patterns across transactions. He said that for Siete Foods, MAX is projected to protect up to 8% of revenue that would otherwise be lost to stockouts by catching “undetected inventory failures.”

Executives said the MAX beta includes more than 400 customers. In Q&A, the CEO told Rothschild & Redburn’s Lachlan Brown that the 400-customer beta participation figure was above internal targets. He said usage varied by customer size and use case, and that the company’s current thinking—though not final—is to include MAX in many base subscriptions with throttled usage, charging more for incremental usage.

In response to William Blair’s Dylan Becker, the CEO said customers are finding value in combining their own network data with SPS’s proprietary databases of retailer and distributor supply chain expectations, describing differences in compliance rules among retailers. He also pointed to MAX Connect, which he described as “an MCP endpoint” designed to provide access to network data and those proprietary databases, enabling agent-to-agent interactions.

In response to Morgan Stanley’s Chris Quintero, the CEO said SPS has long been “very open and API-friendly,” including in how it connects to retailers through APIs, and emphasized the importance of agent-to-agent workflows. He added that SPS plans to monetize MAX Connect interactions “over time once we get through this beta period.”

Del Preto also cited AI-driven internal efficiency opportunities, pointing to improvements in customer onboarding time, productivity gains in product engineering, and potential operating leverage across sales and marketing, R&D, and G&A. He said he is focused on partnering closely with IT to identify where AI can “add the most value internally.”

Guidance and outlook for 2026

For the second quarter of 2026, the company expects revenue of $194.5 million to $196.5 million, representing approximately 4% year-over-year growth at the midpoint. SPS guided for adjusted EBITDA of $60.9 million to $62.4 million, and fully diluted earnings per share of $0.53 to $0.56. The company expects non-GAAP diluted income per share of $1.06 to $1.09.

For the full year 2026, SPS guided for revenue of $796.0 million to $802.0 million, representing approximately 6% growth at the midpoint, and adjusted EBITDA of $262.8 million to $267.3 million, representing approximately 14% to 16% growth over 2025. The company expects fully diluted EPS of $2.66 to $2.69 and non-GAAP diluted income per share of $4.73 to $4.76. Del Preto also said investors should model an effective tax rate of approximately 30% on a quarterly basis for the remainder of the year, calculated on GAAP pre-tax net earnings.

On growth rates, Quintero asked about the company’s medium-term framework given a lower Q2 growth outlook. The CEO said management still believes “high single digits over the mid to long term is the appropriate growth rate,” attributing the current drag to Amazon revenue recovery. Del Preto added that Q2 includes the first full-year year-over-year comparison for Carbon6 and said the implied growth in the back half of the year suggests “pretty strong re-acceleration.”

Management also discussed signs that invoice and contract scrutiny tied to tariff-driven macro pressures may be easing. The CEO said early indications suggest the scrutiny observed last year is “subsiding,” while responding to Stifel’s Lane that SPS is “cautious and watching” renewals but has not yet seen customer feedback indicating acute impacts from broader global conflict. In a separate Q&A, management said customers have not shown the same level of pressure in 2026 as in 2025 regarding document plans and trading partner reductions, which contributed to increased confidence for the remainder of the year.

Finally, SPS discussed its approach to capital allocation and potential M&A. Del Preto said the company’s current focus is “run the business, buy back shares,” while the CEO noted that over the long term the company views M&A as part of its strategy, citing opportunities to consolidate further in EDI, broaden supplier solutions, and potentially expand outside the U.S. as international operations scale.

About SPS Commerce (NASDAQ:SPSC)

SPS Commerce, Inc is a leading provider of cloud-based supply chain management solutions that enable seamless collaboration between retailers, suppliers and logistics providers. Through its robust network, SPS Commerce connects trading partners with electronic data interchange (EDI) capabilities, helping businesses automate order processing, inventory management and fulfillment workflows. The company’s platform ensures data accuracy, accelerates order-to-cash cycles and reduces manual intervention, supporting a wide range of industries including retail, grocery, consumer goods and automotive.

The company offers a suite of services encompassing EDI, retail-ready compliance, order management and data analytics.

The article “SPS Commerce Q1 Earnings Call Highlights” was originally published by MarketBeat.