SPS Commerce , Inc. (NASDAQ: NASDAQ:SPSC), a prominent provider of retail supply chain cloud services, on Thursday, said the completion of its acquisition of SupplyPike, a company specializing in automated invoice deduction management and prevention.
The strategic move is aimed at expanding SPS Commerce's product offerings and enhancing its ability to support the intricate nature of retail supply chain operations.
SupplyPike, recognized for its innovative software-as-a-service (SaaS) platform, offers tools for continuous monitoring and management of invoice deductions, which are designed to help recover lost revenue and provide insights for process improvement and future deduction elimination.
"The acquisition of SupplyPike allows SPS Commerce to offer an additional way for suppliers to meet their retail customers' expectations," stated Chad Collins, CEO of SPS Commerce.
The transaction involves approximately $119 million in cash, net of cash acquired, and $87 million in SPS Commerce stock. The financial outlook for SPS Commerce includes an anticipated revenue increase of roughly $3.0 million for the third quarter of 2024 due to the acquisition, with an expected negative impact on Adjusted EBITDA of about $750,000.
For the full fiscal year 2024, the acquisition is projected to contribute approximately $8.0 million in revenue, with an Adjusted EBITDA negative impact of around $1.5 million. The company forecasts that for fiscal year 2025, the acquisition will add approximately $25.0 million in revenue and achieve breakeven in Adjusted EBITDA.
The company's network connects over 120,000 companies across various sectors including retail, grocery, distribution, and logistics, providing cloud technology, service, and expertise to optimize supply chain operations.
SPS Commerce reported an 18% increase in year-over-year revenue, with earnings per share (EPS) also showing a 16% increase. This performance led Baird to raise the company's stock price target to $186.00, maintaining a neutral rating.
Analysts at Needham also raised their price target for SPS Commerce to $230, maintaining a buy rating, largely due to a surge in Average Revenue Per User (ARPU).
InvestingPro Insights
SPS Commerce, Inc. (NASDAQ: SPSC) has been a beacon of consistency in the retail supply chain sector, and its recent acquisition of SupplyPike is set to bolster its service offerings further. While the company navigates the financial impact of this new venture, investors and stakeholders are keeping a close eye on the company's valuation metrics and stock performance.
InvestingPro data highlights the company's robust market capitalization of $7.99 billion, reflecting investor confidence and market presence. In terms of valuation, SPS Commerce is currently trading at a high P/E ratio of 111.41, suggesting a premium market valuation that aligns with the company's steady growth narrative. This is further substantiated by a revenue growth of 18.47% over the last twelve months as of Q2 2024, indicating the company's ability to expand its top line effectively.
An InvestingPro Tip notes that SPS Commerce has seen six analysts revise their earnings upwards for the upcoming period, which may signal anticipated operational efficiency or increased market share following the SupplyPike acquisition. Additionally, the stock has been trading near its 52-week high, with the price at 98.48% of the peak, showcasing a strong market performance.
For investors seeking more nuanced insights, InvestingPro offers an array of additional tips — currently listing 18 more for SPS Commerce — which can be found at https://www.investing.com/pro/SPSC. These tips provide a deeper understanding of the company's financial health and market position, which can be invaluable for making informed investment decisions.
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