Sps Commerce Inc (NASDAQ: SPSC)

Sector: Technology Industry: Software - Application CIK: 0001092699
Market Cap 3.59 Bn
P/B 3.74
P/E 42.18
P/S 4.92
ROIC (Qtr) 8.85
Div Yield % 0.00
Rev 1y % (Qtr) 16.02
Total Debt (Qtr) 9.64 Mn
Debt/Equity (Qtr) 0.01

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 173.48M provides robust 17.99x coverage of total debt 9.64M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 133.72M provide 23.78x coverage of short-term debt 5.62M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 390.38M provides 40.48x coverage of total debt 9.64M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 148.39M exceeds capital expenditure of 25.09M by 5.92x, indicating strong organic growth funding capability.
  • Retained earnings of 403.60M provide full 100.37x coverage of long-term debt 4.02M, indicating strong internal capital position.

Bear case

  • Operating cash flow of 173.48M barely covers its investment activities of (161.73M), with a coverage ratio of -1.07, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (161.73M) provide weak support for R&D spending of 69.13M, which is -2.34x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 133.72M provide limited coverage of acquisition spending of (143.15M), which is -0.93x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 173.48M shows concerning coverage of stock compensation expenses of 55.61M, with a 3.12 ratio indicating potential earnings quality issues.
  • Operating earnings of 112.23M show weak coverage of depreciation charges of 55.47M, with a 2.02 ratio indicating high capital intensity and potential reinvestment needs.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.01 2.65
EV to Cash from Ops. EV/CFO 20.12 13.37
EV to Debt EV to Debt 362.00 57.69
EV to EBIT EV/EBIT 31.11 19.12
EV to EBITDA EV/EBITDA 21.31 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 23.53 14.69
EV to Market Cap EV to Market Cap 0.97 -92.28
EV to Revenue EV/Rev 4.78 4.60
Price to Book Value [P/B] P/B 3.74 4.26
Price to Earnings [P/E] P/E 42.18 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.52
Interest Coverage Int. cover (Qtr) 0.00 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -38.40 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -32.75 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 8.34 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 29.66 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 10.63 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 10.63 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 5.16 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 12.85 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 22.53 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.63 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.84 3.75
Current Ratio Curr Ratio (Qtr) 1.97 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.01 0.17
Interest Cover Ratio Int Coverage (Qtr) 0.00 -52.32
Times Interest Earned Times Interest Earned (Qtr) 0.00 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 23.00 -100.06
EBIT Margin % EBIT Margin % (Qtr) 15.38 -164.24
EBT Margin % EBT Margin % (Qtr) 15.38 -116.94
Gross Margin % Gross Margin % (Qtr) 68.40 58.20
Net Profit Margin % Net Margin % (Qtr) 11.70 -121.65