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.
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