SPS Commerce (NASDAQ:SPSC) reported second-quarter 2026 revenue of $197.8 million, up 6% from a year earlier, as the company cited continued upsell and cross-sell momentum among its core customers. The company said its core business, excluding the divested third-party Revenue Recovery operation, grew at a high-single-digit rate.
Adjusted EBITDA rose to $66.6 million in the quarter. SPS Commerce ended the period with $173 million in cash and cash equivalents and generated $57.4 million in free cash flow, bringing trailing 12-month free cash flow to $198.7 million, up 40% year over year. The company used $51.2 million, or nearly 90% of quarterly free cash flow, for share repurchases.
Revenue Recovery Divestiture Narrows Focus
CEO Chad Collins said the transaction is intended to concentrate SPS Commerce’s efforts on first-party suppliers selling wholesale through multiple retailer relationships. He said those customers have greater overlap with the company’s broader portfolio, including Fulfillment, Revenue Recovery and Analytics offerings.
“The 1P side of this business is much more attractive for us and has much more overlap with our ideal customer profile than the 3P side does,” Collins said during the call. He also cited the former business’s take-rate model and policy changes affecting third-party sellers on Amazon as factors behind the decision.
The divestiture removed approximately 7,300 customers from the company’s recurring-revenue customer base. SPS Commerce reported approximately 46,650 recurring-revenue customers at the end of the second quarter and average revenue per customer of $15,100.
CFO Joe Del Preto said the timing of the sale caused the reported quarterly ARPU figure to skew higher because the company included full-period 3P revenue while the quarter-end customer count no longer included the divested customers. He said the calculation method was unchanged and should normalize going forward.
AI Rollout Centers on MAX
Collins highlighted the company’s MAX artificial intelligence agent, which draws on transaction activity, trading-partner patterns, digital specifications and compliance rules across the SPS network. The company plans to make MAX available to all Fulfillment customers by the end of the summer, after initially offering it through a beta program.
According to Collins, MAX can identify supply-chain errors, compare retailer requirements and help customers diagnose operational issues. He said beta users have used the tool to identify a $290,000 invoice failure tied to an incorrect UPC code, 100 stalled drop-ship orders for an outdoor brand, and $70,000 in unacknowledged purchase orders for a food manufacturer.
Branch, a wholesale brand serving retailers including Williams-Sonoma, Lumen and Office Depot, used MAX to reduce the weekly time spent managing overdue orders for one key retail partner by 90%, Collins said.
SPS Commerce expects MAX Chat, the current conversational interface, to be included in standard customer subscriptions. Collins said the company’s primary AI monetization opportunity is expected to come from autonomous agents that can detect and, in some cases, resolve recurring supply-chain issues. The company expects to be able to sell those agents by late in the fourth quarter.
“The first set of agents that we put out are going to be probably more addressable for the more highly complex customers with more trading relationships,” Collins said, adding that the company expects to extend the capabilities to medium and smaller customers over time.
Analytics Platform and Customer Expansion
The company also said its Analytics product is now operating on an enhanced platform designed to support higher data volumes, broader uses and future AI-based predictive capabilities. Collins said the updated platform improves the user experience and provides customers with more self-service tools and more detailed product- and location-level insights.
RuffleButts, a Texas-based children’s clothing company, is using the platform to analyze sell-through data across more than 400 retail locations and an e-commerce channel for one major retailer, according to SPS Commerce. The company said the customer is considering adding another major retailer to its reporting.
On Revenue Recovery, Collins said the company is increasingly using network data to identify Fulfillment customers that may be strong candidates for the offering. He said SPS can assess trading volumes and partner relationships to target potential customers and, in some cases, estimate recovery opportunities.
The company said its customer count declined by slightly more than 200 sequentially on a first-party basis, primarily because of timing in retail enablement programs. Collins said those customers tend to carry low ARPU and that the company expects customer count to be flat to slightly positive for the full year, with some second-half enablement momentum potentially carrying into early 2027.
Outlook Includes Impact of Sale
SPS Commerce said its outlook incorporates an estimated $10.5 million reduction to second-half 2026 revenue from the 3P Revenue Recovery divestiture. The company expects the divestiture to be neutral to adjusted EBITDA during the second half.
- Third-quarter revenue is projected at $196.3 million to $198.3 million.
- Third-quarter adjusted EBITDA is projected at $67.4 million to $69.4 million.
- Third-quarter GAAP diluted earnings per share are expected to be $0.72 to $0.76, while non-GAAP diluted income per share is expected to be $1.20 to $1.23.
- Full-year revenue is projected at $788.4 million to $793.4 million, representing about 5% growth at the midpoint.
- Full-year adjusted EBITDA is projected at $264.6 million to $269.1 million, implying a 34% midpoint margin and approximately 300 basis points of expansion from 2025.
Excluding the divested business, SPS Commerce expects core revenue growth to remain in the high single digits for 2026. Del Preto attributed the quarter’s revenue outperformance to improved gross retention and expansion among existing customers, including the addition of more trading partners.
Management said it was not seeing substantial macroeconomic pressure in customer conversations. Collins noted that supplier customers faced tariff-related headwinds and contract right-sizing in 2025, but said those pressures had dissipated as expected in 2026. The company continues to monitor fuel costs and tariff uncertainty.
About SPS Commerce (NASDAQ:SPSC)
SPS Commerce, Inc is a leading provider of cloud-based supply chain management solutions that enable seamless collaboration between retailers, suppliers and logistics providers. Through its robust network, SPS Commerce connects trading partners with electronic data interchange (EDI) capabilities, helping businesses automate order processing, inventory management and fulfillment workflows. The company’s platform ensures data accuracy, accelerates order-to-cash cycles and reduces manual intervention, supporting a wide range of industries including retail, grocery, consumer goods and automotive.
The company offers a suite of services encompassing EDI, retail-ready compliance, order management and data analytics.
