SPS Commerce (SPSC) Stock Forecast & Price Target

SPS Commerce Inc is witnessing robust financial growth, highlighted by a 16.0% year-over-year increase in total revenue, driven by a 20.8% growth in recurring revenue and an organic recurring revenue growth rate of 10.5%. With adjusted EBITDA projected to be between $246.3 million and $266.7 million, reflecting an 11.2% growth, the company's adjusted EBITDA margin is expected to expand by 2 percentage points to approximately 32.7%. Additionally, the normalization in organic customer additions is promising, with a trajectory aimed at returning to pre-pandemic customer addition levels by 2025, suggesting a strong operational outlook.

SPS Commerce Inc has revised its guidance for Adjusted EBITDA down to $229.7-$231.7 million, reflecting a slight increase in margin but still indicating overall financial softness as the company previously expected higher performance metrics. The company's revenue growth projection for FY25 has also been lowered to $751.6-$753.6 million, marking a decrease from earlier expectations of 19.3% growth to 18.0% at the midpoint, driven by poor revenue recovery performance that fell significantly short of projections. Furthermore, backlog issues related to Carbon6's 3P business and deferred enablement campaigns, compounded by macroeconomic uncertainties, have contributed to a substantial 26% drop in share price following disappointing third-quarter results and concerns over future growth prospects.