SPS Commerce offers a high-quality recurring-revenue network at compressed valuation, with MAX monetization and potential private-equity interest creating asymmetric five-year upside despite near-term growth deceleration.
Overview
SPS Commerce operates a cloud-based supply-chain management network historically centered on EDI, connecting more than 50,000 active recurring revenue nodes and over 300,000 pre-certified trading relationships with major retailers and suppliers. Its business is unusually predictable: approximately 94%–96% of revenue is recurring subscription revenue, and pricing is not directly tied to retail GMV. Q2 2026 revenue increased 5.6% year over year to $197.8 million, exceeding the $195.4 million consensus, while recurring revenue rose 6% to $189.9 million. Non-GAAP EPS increased 27% to $1.27, Adjusted EBITDA rose 19% to $66.6 million, and trailing-12-month FCF reached $198.7 million, up 40%. **The key financial reset is FY2026 guidance of $788.4 million–$793.4 million revenue and 34% midpoint Adjusted EBITDA margin**, reflecting 5%–6% growth but significant operating leverage. The $9.5 million sale of Carbon6’s 3P business removed lower-margin assets, despite a $23.5 million write-down. At approximately 3.7x trailing EV/Sales and 17.3x forward P/E, valuation is compressed. Near-term catalysts are MAX monetization in late Q4 2026 and Morgan Stanley’s strategic review, including potential private-equity interest.