SPS Commerce, Inc. (NASDAQ:SPSC) Q3 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 04:30 pm ET

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SPS Commerce, Inc. (NASDAQ:SPSC) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the SPS Commerce Third Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call may be recorded.

I would now like to introduce your host for today's conference, Ms. Irmina Blaszczyk. Maam, you may begin.

Executive
Irmina Blaszczyk

Thank you, good afternoon, everyone, and thank you for joining us on SPS's Third Quarter 2018 Conference Call.

(Forward-Looking Cautionary Statements)

And with that, I will turn the call over to Archie.

Executive
Archie Black

Thank you, Irmina, and welcome, everyone. Over the years, SPS Commerce has evolved to lead the industry in cloud-based supply chain management solutions, helping retailers progress along their journey to evolve their omnichannel strategy. We posted a strong third quarter of 2018. Revenue grew 12% to $62.9 million, recurring revenue grew 13% and adjusted EBITDA grew 70% to $14.4 million. While we continue to make great progress towards our 2020 financial goals, we are committed to offering our customers technology-leading solutions that will position them competitively in a changing retail landscape.

As retailers and suppliers work together to adopt an efficient omnichannel strategy, we strive to make the process as seamless as possible and improve the customer experience across the SPS Commerce network of more than 75,000 customers worldwide. To expand our capabilities, we recently acquired EDI Admin, a leading provider of supply chain integration technology. Based in Minneapolis, EDI Admin is a longtime partner of SPS Commerce and shares our vision of helping trading partners work better together with end-to-end automation and integration solutions. We believe bringing this technology in-house accelerates our industry leadership by delivering additional automation capabilities for our products. We're excited to welcome the talented EDI Admin team to SPS Commerce.

In addition to providing new automation capabilities to streamline order fulfillment, we continue scaling a multi-tenant offering for vendor communities who are faced with evolving technology requirements across the retail landscape. Over the years, SPS Commerce has grown its network and portfolio of comprehensive supply chain management solutions to help our customers scale their businesses by enabling them to connect efficiently and seamlessly with various retailers and logistics providers.

For example, Circle Media, an electronics vendor, became a SPS Commerce customer to meet Walmart's EDI requirements. Leveraging the SPS Commerce network, they then connected to additional retailers, including Target and Bed Bath & Beyond as well as a third-party logistics provider to streamline all trading partner relationships. As the vendors scale their operations and their order volumes increased, they were able to once again turn to SPS for our NetSuite fulfillment integration solution to save time and avoid risk associated with manual entry.

With SPS Commerce providing a full service solution across their business, we are able to easily add the vendors connection to Shopify. This customer now has seamless automation with all of their trading partners, whether they