SPS Commerce, Inc. (NASDAQ:SPSC) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 04:30 pm ET


SPS Commerce, Inc. (NASDAQ:SPSC) Q4 2018 Earnings Conference Call Transcript


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Good day ladies and gentlemen and thank you for standing by. We welcome you to the SPS Commerce Fourth Quarter and Full Year 2018 Earnings Call. (Operator Instructions) As a reminder this conference call may be recorded. I would now like to turn the conference over to Irmina Blaszczyk. Please go ahead.

Irmina Blaszczyk

Thank you. Good afternoon everyone and thank you for joining us on SPS Commerce Fourth Quarter and Full Year 2018 conference call. We will make certain statements today including with respect to our expected financial results, go-to-market strategy and efforts designed to increase our traction and penetration with retailers and other customers. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward looking statements reflect our opinions only as of the date of this call and we undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Please refer to our SEC filings specifically our Form 10-K as well as our financial results press release for a more detailed description of the risk factors that may affect our results.

These documents are available at our website spscommerce. com and at the SEC's website, sec.gov. In addition we are providing a historical data sheet for easy reference on our Investor Relations section of our website spscommerce.com. During our call today we will discuss adjusted EBITDA financial measures and non-GAAP earnings per share. In our press release and our filings with the SEC each of which is posted on our website, you will find additional disclosures regarding these non-GAAP and adjusted EBITDA measures including reconciliations of these measures with comparable GAAP measures.

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

Archie Black

Thanks Irmina and welcome everyone. 2018 marks a year of continued execution for SPS Commerce. We delivered on our strategic goals and financial targets as we focused on delivering increased profitability and expanded margins while posting strong revenue growth. We made two strategic acquisitions that strengthened our competitive positioning and we repurchased 290,000 shares at an average price of $68.56 per share. For the full year, revenue grew 13% to $248.2 million and adjusted EBITDA grew 50% to $51.3 million. Our focus on profitability resulted in adjusted EBITDA margins of 21%, up from just 13% just two years ago.

As retailers and suppliers continue on their journey to embrace e-commerce, SPS Commerce plays an integral role in providing cloud-based based supply chain management solutions. In 2018, we experienced a strong year of enablement campaigns with retailers and distributors across various industries. Among others, we continue to evolve our relationship with Costco, onboarding new vendors to the Costco platform, fueling the growth of our retail network. We ran a community enablement campaigns with Walgreen suppliers based on Walgreens' updated order management requirements to ensure new and existing vendors comply with rulebook enhancements and specifications.

We executed community enablement campaigns with Sprouts Farmers