SPS Commerce (SPSC) Q3 2026 Earnings Call: 36% EBITDA Margin, Amazon Headwinds
Source Tradingkey
Key Takeaways
- Q3 2026 revenue increased 4% year over year to $197.6 million, while recurring revenue also grew 4%. The divested 3P revenue recovery business and Amazon 1P take-rate headwinds reduced reported growth by a combined 500 basis points.
- Adjusted EBITDA rose 17% to $70.9 million, representing 36% of revenue and exceeding SPS Commerce’s 35% long-term margin target. Adjusted gross margin expanded 170 basis points to 73%.
- Free cash flow reached $58.5 million for the quarter and $202.6 million on a trailing-12-month basis, up 37% year over year. SPS Commerce used $48.8 million, or 84% of Q3 free cash flow, to repurchase shares.
- Management expects Q4 revenue of $199.3 million to $201.3 million. Excluding the divestiture and Amazon take-rate effects, underlying growth is projected at 8% to 9%.
- MAX is now available to all Fulfillment customers. SPS Commerce plans to begin charging for MAX agents in 2027 while prioritizing broad customer adoption.
- Amazon policy changes reduced recovery yields for 1P take-rate customers. Management said this accounted for most of the revenue impact, with accelerated conversions from take-rate to subscription contracts representing a smaller portion.
Core Financial Data
| Metric | Q3 2026 | Change or context |
|---|---|---|
| Revenue | $197.6 million | Up 4% year over year |
| Recurring revenue growth | 4% | Divestiture and Amazon take-rate effects reduced growth by 500 basis points |
| Recurring revenue customers | 46,700 | Increased sequentially; divestiture removed approximately 7,300 smaller 3P customers |
| Average revenue per customer | $16,200 | Benefited from the removal of smaller divested customers |
| Adjusted EBITDA | $70.9 million | Up 17% year over year |
| Adjusted EBITDA margin | 36% | Above the company’s 35% long-term target |
| Adjusted gross margin | 73% | Up 170 basis points year over year |
| Free cash flow | $58.5 million | Trailing-12-month free cash flow was $202.6 million, up 37% |
| Cash, equivalents and short-term investments | $184 million | Quarter-end balance |
| Share repurchases | $48.8 million | Equal to 84% of Q3 free cash flow |
Disclaimer: For information purposes only. Past performance is not indicative of future results.
Recommended Articles
Big tech earnings arrive this week, with Microsoft, Alphabet, and Amazon all releasing quarterly reports.In their latest quarters, Google Cloud grew 82%, Azure 42%, and Amazon Web Services (AWS) 37%,
Fed decision, US inflation and Middle East tensions take centre stage. Explore the US dollar, gold and AUD/USD outlook for Australian traders.
CoreWeave shares jumped more than 6% on Tuesday morning after the AI infrastructure company announced that most of its planned data-center capacity in Copenhagen was operational. The news gave investo
Alphabet (GOOGL) stock trades below its 200-day moving average by the widest margin in 17 months, Barchart data show. AI spending fears pushed shares near $317 ahead of Wednesday’s third-quarter (Q3)
US GDP grew 3.4% while inflation reached 3.6%. Nasdaq fell as AI stocks sold off, with gold near $4,000. Explore the latest market news for Australia.
