SPS Commerce (SPSC) Stock Forecast & Price Target

SPS Commerce demonstrated impressive financial performance, with total revenue increasing 17.9% year-over-year for the 96th consecutive quarter, and recurring revenue growing approximately 19%. The company saw a significant rise in recurring revenue as a percentage of total revenue, which climbed to 95%, alongside an increase in the wallet share per recurring customer, reaching $14,300, representing an 18% year-over-year growth. Additionally, operating cash flow increased by $7.8 million year-over-year to $40.6 million, showcasing a strong margin improvement from 22.6% to 23.7%.

SPS Commerce Inc has experienced a downward adjustment in its long-term revenue growth forecasts, reducing the expectations from an average of 18% to 15% due to a significant decline in organic growth, which is projected to further decelerate to a range of 11% to 13% for calendar year 2025. The company's customer acquisition has been notably weak, with a projected net addition of only 300 customers for CY24, sharply down from the previous five-year average of 1,900 annual additions, highlighting concerns about its growth trajectory. Additionally, the adjusted EBITDA for the fourth quarter, while slightly above guidance, does not alleviate worries about a potential decline in average revenue per user (ARPU) due to the onboarding of new customers at lower price points, suggesting that the firm's competitive positioning may be compromised in the face of technological advancements.