SPS COMMERCE INC — Annual Report 2023

Apr 4, 2024

ARS 1 spsc_2023annualreportx.htm ARS Document generated by Workiva Inc spsc_2023annualreportx

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T O O U R S T O C K H O L D E R S In 2023, I joined SPS Commerce knowing the company plays a pivotal role in supply chain automation as retailers and suppliers transition to omnichannel retail. With a full quarter behind me, I can say with conviction that the network SPS has built over the years uniquely positions us to optimize our customers’ supply chain operations. This is demonstrated through our success to date, and I am highly confident our differentiated go-to-market approach will provide an ongoing opportunity for growth. By simplifying the exchange of supply chain data, SPS has become the world’s retail network. By harnessing that data, we can help our customers make their trading partner relationships more collaborative and profitable. As we explore new use cases and adjacencies to leverage the data, we continue to create a strong market position and an undeniable value proposition for trading partners everywhere. Looking back at 2023, the company’s strong performance underscored our ability to execute as macro and retail dynamics continue to evolve. The fourth quarter of 2023 represented our 92nd consecutive quarter of revenue growth and a strong finish to an exciting year. For the full year 2023, revenue grew 19% to $536.9 million. Recurring revenue grew 20% year-over-year led by Fulfillment growth of 20%. Adjusted EBITDA1 grew 19% year-over-year to $157.6 million, resulting in adjusted EBITDA margin1 of 29%. The total number of recurring revenue customers increased 6% year-over-year to approximately 44,800, and wallet share, or average revenue per recurring revenue customer, increased 10% year-over-year to approximately $11,550. Throughout the year we demonstrated ongoing success in expanding our network, helping retailers and suppliers with supply chain automation, and enabling their international expansion. ERP integration is another key component to solving supply chain challenges, and our continued focus on the channel and the strategic partnerships we established over the years play a pivotal role in growing our network. SPS’ ability to deliver world-class solutions includes targeted acquisitions that integrate best in class technology with the SPS platform. In 2023, we continued to expand our portfolio with the acquisition of TIE Kinetix to strengthen our e-invoicing capability and extend our European presence. We also acquired The Order Exchange, one of our technology partners in Australia, who enabled suppliers to link their line of business applications through SPS’ network, unlocking connections to trading partners around the world. In addition, we are advancing our environmental, social and governance endeavors. We are proud of our progress to date and remain committed to effect positive change through environmental stewardship, diversity, equity and inclusion, and giving back to the communities in which we live and work. In closing, I would like to acknowledge all SPS employees around the world for their inherent retail expertise, their commitment to consistent execution, and their drive to deliver the best experience to 120,000 SPS Commerce customers around the globe to date. Combined with our technology roadmap which includes initiatives to further simplify access to the network and continued buildout of trading partner connections, SPS is well positioned to capitalize on growth opportunities today and in the long term, as we continue to execute our vision to be the world’s retail network. Sincerely, Chad Collins CEO 1 Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. We believe that these non-GAAP financial measures provide useful information to our management, board of directors, and investors regarding certain financial and business trends relating to our financial condition and results of operations. Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in our consolidated financial statements and are subject to inherent limitations. A reconciliation of these non-GAAP measures can be found within the ‘Results of Operations’ section of Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, within the attached Form 10-K.

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Executive Officers Chad Collins, Chief Executive Officer Kim Nelson, Executive Vice President and Chief Financial Officer Jim Frome, President and Chief Operating Officer Archie Black, Executive Chair Board of Directors Archie Black Chad Collins James Ramsey Marty Réaume Tami Reller Phil Soran Anne Sempowski Ward Sven Wehrwein Corporate Headquarters 333 South Seventh Street, Suite 1000 Minneapolis, MN 55402 USA Toll-free: (866) 245-8100 Market Listing Nasdaq Global Market Symbol: SPSC Annual Meeting Thursday, May 16, 2024 Transfer Agent & Registrar EQ Shareowner Services 1110 Centre Point Curve, Suite 101 Mendota Heights, MN 55120 USA (800) 468-9716 shareowneronline.com Independent Public Accountants KPMG LLP 4200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 USA Legal Counsel Faegre Drinker Biddle & Reath, LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 USA

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SPS COMMERCE CORPORATE HEADQUARTERS 333 South Seventh Street, Suite 1000 Minneapolis, MN 55402 USA Toll-free: (866) 245-8100 Main: (612) 435-9400 AMSTERDAM: +31 020 8881723 BEIJING: +86 4006 233 251 KYIV: +3 8044 594 80 89 MELBOURNE: +61 3 9847 7000 SYDNEY: +61 2 8073 8209 TORONTO: 888 550 8665 spscommerce.com