SPS Commerce, Inc. (NASDAQ:SPSC) Q1 2020 Earnings Conference Call - Final Transcript

Apr 30, 2020 • 04:30 pm ET


SPS Commerce, Inc. (NASDAQ:SPSC) Q1 2020 Earnings Conference Call - Final Transcript


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Kim Nelson

expense of approximately $5.1 million, depreciation expense of approximately $3.5 million and amortization expense of approximately $1.4 million.

As a result of the government-mandated office closures and reduced travel, we are recognizing savings and we'll continue to manage discretionary spending accordingly given ongoing uncertainties resulting from the pandemic. However, we're in a unique position to expand our market presence, and we will continue to invest in product innovation to advance our technology leadership and continue to deliver the best customer experience.

We are withdrawing 2020 annual guidance due to uncertainty related to the macroeconomic impact of the pandemic and the lack of visibility into the magnitude of the impact on our retail network. Dynamics that may negatively impact our business include prolonged store closures, bankruptcies, reduced demand for our analytics product, and potential push out in ERP migration.

Dynamics that may positively impact our business include increased enablement campaign activity driven by current e-commerce trends, including demand for our drop ship product. We will continue to monitor the macroeconomic impact on retail dynamics and reassess our visibility for the full year at the end of the second quarter. However, given our history of strong operating leverage and the resilience of our SaaS business model, we remain confident in our ability to expand adjusted EBITDA margin in 2020 and achieve our long-term adjusted EBITDA margin target of 35%.

Although we are withdrawing guidance for the year, we are providing the following information for modeling purpose. We expect stock-based compensation expense for the year of approximately $19.7 million, depreciation expense of approximately $13.8 million, and amortization expense of approximately $5.6 million. Also, for the remainder of the year on a quarterly basis, investors should model a 30% effective tax rate calculated on GAAP pretax net earnings.

In summary, we expect that the current supply chain dynamics will amplify the need for e-commerce and EDI solutions in the long term, and we believe SPS Commerce is uniquely positioned to capitalize on that opportunity. We are pleased with our ability to continue to provide mission-critical solutions to retailers and suppliers, and we'd like to thank all our employees for their unyielding effort and dedication to support the SPS Commerce network in these challenging times.

With that, I'd like to open the call to questions.