About SPS Commerce

SPS Commerce, Inc. (SPS Commerce) provides cloud-based supply chain management services across its global retail network. The company’s products make it easier for retailers, grocers, distributors, suppliers, and logistics firms to communicate and collaborate by simplifying how they manage and share item, inventory, order and sales data across omnichannel retail channels. The company delivers its products using a full-service model, which includes industry-leading technology and a team of experts that optimize, update, and operate the technology on customers' behalf. The company’s products enable customers to increase supply chain performance, optimize inventory levels and sell-through improve order visibility, and satisfy consumer demands for a seamless omnichannel experience. As of December 31, 2023, the company had approximately 44,800 customers with ongoing contracts to pay it monthly fees, which it refers to as recurring revenue customers. In addition to its recurring revenue customers, the company has provided its cloud-based supply chain management services to approximately 75,200 other organizations, and it refers to the combination as its customers. Once connected to the SPS Commerce cloud-based retail network, the company’s customers often require additional integrations to new organizations that represent an expansion of its cloud-based network and new sources of revenues for it. Products SPS Commerce operates one of the largest retail networks in the world to improve the way retailers, grocers, distributors, suppliers, and logistics firms manage digital item catalogs, fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. As of December 31, 2023, 120,000 customers across approximately 85 countries have used SPS Commerce products to expand and optimize the performance of their trading relationships through the network. The company’s products fundamentally change how organizations communicate information to manage their omnichannel, supply chain, and other business requirements. The company’s products replace traditional, manual, or disparate approaches (such as email, phone, and fax), multiple channel-specific solution providers, as well as custom-built, point-to-point integrations by delivering a single smart connection to the entire SPS Commerce retail network of prebuilt connections to thousands of global trading partners. The company’s products include: Fulfillment - The company’s Fulfillment product is a full-service electronic data interchange (EDI) solution that scales as a business grows. Companies can use a single system to manage orders and logistics from all sales channels, including wholesale, eCommerce, and marketplaces. Fulfillment is configurable for any trading partner, document or business system used for order management and offers a full suite of tools to help businesses efficiently manage their supply chain. Analytics - The company’s Analytics product enables organizations to improve visibility into how products are selling through a single connection across all sales channels, including wholesale, eCommerce, and marketplaces. Analytics improves access and usage of sales and inventory data through a combination of its analytics applications, network of connections, and industry-leading expertise. Other Products – The company provides several complementary products, such as: Assortment - The company’s Assortment product simplifies the communication of robust, accurate item data by automatically translating item attributes, and hierarchies through a single connection across all sales channels. Community - The company’s Community product allows organizations to accelerate digitization of their supply chain and improve collaboration with suppliers through proven change management and onboarding programs. In addition to these offerings, the company provides one-time services, such as professional services and testing and certification. As one of the largest providers of cloud-based services for retail supply chain management, SPS Commerce enables trading partner relationships among retailer, grocer, distributor, supplier, and logistics firms that naturally lead to new customer acquisition opportunities. Network Effect Once connected to the company’s retail network, trading partners can exchange electronic supply chain information with each other. The value of the company’s network increases with the number of trading partners connected to it. After joining its retail network, customers often find that many of their existing or new trading partners are already on the network, allowing for easy connections. The addition of each new customer enables that new customer to communicate with the company’s existing customers and permits its existing customers to do business with the new customer. This network effect of adding additional customers to the company’s products’ infrastructure creates a significant opportunity for existing customers to realize incremental sales by working with its new trading partners and vice versa. As a result of this increased volume of activity among its network participants, it earns additional revenues from these participants. Customer Acquisition Sources Community - The company’s Community product is designed to manage this process and bring suppliers into compliance with new requirements. For instance, a supplier may wish to collaborate with their retailers around point-of-sale analytics data, or a retailer may decide to change the workflow or protocol by which it interacts with its suppliers. In each case, the supplier and retailer may engage it to work with their trading partner base to enable the new capability. Performing these programs on behalf of retailers and suppliers generates supplier sales leads for the company. Referrals from Customers - The company also receives sales leads from its customers seeking to communicate electronically with their trading partners. For example, a supplier may refer a third-party logistics provider or manufacturer, which is not in the company’s network, to it. Direct Marketing - The company employs various marketing strategies. The company’s marketing programs include a variety of lead generating activities including digital marketing, conferences and trade shows, sponsored events, and public relations activities targeted at key decision makers within its prospective customers. Channel Partners - In addition to the customer acquisition sources, the company markets and sells its products through a variety of channel partners, including software providers, resellers, system integrators, and logistics partners. For example, software partners, such as Microsoft, NetSuite, Oracle, SAP, Sage, and their business partner communities generate sales for the company as part of broader enterprise resource planning, warehouse management system and/or transportation management system sales efforts. The company’s logistics partners also drive new sales both by providing leads and by embedding its products as part of their service offerings. Strategy The key elements of the company’s strategy are to further penetrate its current market; expand its distribution channels; expand its international presence; enhance and expand its services; and selectively pursue strategic acquisitions. Technology, Development and Operations Technology SPS Commerce is an early provider of cloud-services to the retail supply chain management industry. The company uses commercially available hardware and cloud-services with a combination of proprietary and commercially available software. The company’s cloud-service model treats all customers as logically separate tenants within a shared virtual infrastructure. Development The company’s research and development efforts focus on maintaining, improving, and enhancing its existing products, as well as developing new products and applications. The company’s multi-tenant products serve all of its customers, which allows it to maintain relatively low research and development expenses and release software updates more frequently compared to traditional on-premise licensed software products that support multiple versions. The company’s development efforts take place at its the United States (U.S.) locations in Minnesota and New Jersey, as well as in Melbourne, Australia; Toronto, Canada; and Kyiv, Ukraine. Operations The company operates its infrastructure in third-party data centers located throughout North America, Europe, and Australia, as well as provisioned services with cloud providers. In most cases, infrastructure and services are managed by it. The company has internal and third-party monitoring software that continually checks the status of services and underlying infrastructure for availability and performance, helping ensure that the network is always available and providing desired service levels. The company has a technology team that includes system provisioning, management, maintenance, monitoring, and back-up. The company operates a service architecture using industry best practices to ensure multiple points of redundancy, high availability, and scale as needed. Sales and Marketing The company sells its products through an employed global sales force that focuses on retailers, grocers, distributors, suppliers, and logistics firms. The company’s marketing teams focus on driving awareness and demand for its products through the following activities: Demand Generation - Engages with target audiences using the latest digital marketing strategies to bring opportunities to the company’s sales teams. Communications - Manages the company’s brand and public relations, as well as provides go-to-market support. Product Marketing - Equips the company’s sales teams, performs market studies, and promotes the unique capabilities of each of its products using its go-to-market strategies. Events - Highlights the company’s presence at industry trade shows and orchestrates virtual and in-person events. Customer Success The Customer Success team includes retail and technology experts who implement the company’s products on its customers' behalf, provide ongoing support, and collaborate with accounts to identify opportunities for added value from their existing products. This team focuses on delivering services that build customer satisfaction and result in high customer retention rates. Intellectual Property and Proprietary Content SPS Commerce relies on a combination of copyright, trademark, and trade secret laws, as well as confidentiality procedures and contractual provisions to protect the company’s proprietary technology and its brand. The company has one patent it acquired through the acquisition of GCommerce. The company has registered trademarks and pending trademark applications in the U.S. and certain foreign countries. The company’s trade secrets consist primarily of the software it has developed for its SPS Commerce cloud-based products and network. History The company was incorporated in 1987 as a Minnesota corporation. It was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in 2001. The company was reincorporated in Delaware in 2001.