Key Highlights

  • Revenue rose 4% to $197.6 million from $189.9 million in the third quarter of 2025.
  • Net income was $30.7 million, or $0.85 per diluted share, up from $25.6 million, or $0.67.
  • Adjusted EBITDA reached $70.9 million, a 36% margin, versus $60.5 million and 32%.
  • Annual Revenue per user rose 22% to about $16,200, while Recurring Revenue customers fell 15% to about 46,700.
  • The company repurchased $51.2 million of stock in the quarter.

Revenue grows 4% with recurring sales at 96% of the mix

SPS Commerce (NASDAQ:SPSC) runs a Supply chain network that connects retailers, brands, distributors, manufacturers and logistics providers, so a company can connect once and transact with many trading partners. It filed its Quarterly Report for the period ended September 30, 2026 on October 29, 2026.

Revenue was $197.6 million, up $7.7 million, or 4%, from $189.9 million a year earlier. Recurring revenues rose 4% to $189.0 million and made up 96% of total revenue in both periods. The company said growth came from greater usage of its products by first-party recurring revenue customers.

For the nine months, revenue was $587.6 million, up 5%.

The 3P divestiture reshapes the customer count and revenue per user

On June 30, 2026, the company sold the third-party portion of its revenue recovery business, which it had acquired in February 2025 through the Carbon6 acquisition, and received $8.8 million in cash, net of cash transferred. It recognized a loss of about $23.5 million on the sale, which it described as an immaterial portion of operations.

The sale explains a sharp divergence in the customer metrics. Recurring revenue customers declined 15% to about 46,700, including a drop of roughly 8,050 third-party customers, while annual revenue per user increased 22% to about $16,200. All customers are now first-party.

Operating income climbs 28% as costs hold flat

Gross profit rose 6% to $140.5 million, lifting the gross Margin to 71% from 69%, as cost of revenues fell 1% on lower third-party personnel costs. Total operating expenses were $100.6 million, essentially unchanged from $100.8 million.

Income from operations was $39.9 million, up 28% from $31.2 million. Income tax expense rose 54% to $10.6 million, so Net Income grew 20% to $30.7 million, or $0.85 per diluted share against $0.67. Non-GAAP income per diluted share was $1.39, compared with $1.13.

Nine-month results carry the weight of the divestiture loss

Because of the $23.5 million loss on sale, nine-month income from operations fell 13% to $72.9 million, and net income declined 15% to $57.3 million. Diluted Earnings per Share were $1.56, against $1.77 a year earlier, while non-GAAP income per diluted share rose to $3.75 from $3.12.

Adjusted EBITDA for the nine months was $195.4 million, up from $170.9 million. The company also noted that an accounting change will raise amortization on acquired technology by about $4.0 million in the fourth quarter of 2026 and $6.9 million in 2027.

Cash generation funds Buybacks as the share count shrinks

Cash and short-term investments were $183.5 million at September 30, 2026, and the company reported no variable rate debt. Operating Cash Flow for the nine months was $185.7 million, up from $132.9 million.

The company repurchased 684,495 shares for $51.2 million in the quarter, and 2,348,031 shares for $149.9 million year to date. Diluted shares were 36.2 million, versus 38.0 million a year earlier, and $136.4 million remained available under the 2025 program, which expires on December 1, 2027. Readers will likely watch whether margins hold as the higher amortization arrives and how much of the remaining authorization is used.