SPS Commerce 2026 Q2 Earnings Call

Please go ahead. Good afternoon, everyone, thank you for joining us on SPS Commerce second quarter 2026 conference call.

We will make certain statements today, including with respect to our expected financial results, go-to-market strategy, and efforts designed to increase our traction and penetration with retailers and other customers. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to publicly update and revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Please refer to our SEC filings, specifically our Form 10-K, as well as our financial results press release for a more detailed description of the risks factors that may affect our results.

These documents are available at our website, spscommerce.com, and at the SEC's website, sec.gov. In addition, we are providing a historical data sheet for easy reference on the investor relations section of our website, spscommerce.com. During our call today, we will discuss Adjusted EBITDA financial measures and non-GAAP income per share. In our press release and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures. With that, I will turn the call over to Chad.

Thanks, Irmina, good afternoon, everyone. Thank you for joining us today. At SPS Commerce, our foundation has always been our cloud-based supply chain network. Today, our network stands as a massive interconnected retail ecosystem of tens of thousands of suppliers and 3,500 buying organizations, including all the major retailers and distributors in North America. We work with more than 2,000 logistics providers and over 400 technology partners, which enables us to integrate our network with all of our customer supply chains and business systems. We are protocol agnostic and enable Fulfillment models and channels with enterprise-grade security certifications. That foundation makes everything that follows possible and represents every AI use case on our network. The SPS Commerce Network took over 25 years to get to where it is today.

Through its effect and scale, we are building partnerships, supporting evolving supply chains, and helping our customers grow. Having recently divested the 3P Revenue Recovery business, we have sharpened focus on strategic relationships with 1P suppliers who operate multi-retailer trading relationships and benefit from our intelligent supply chain and portfolio solutions. As the network expands, we continue to capture proprietary intelligence from trading partner activity, transaction patterns, digital specifications, and compliance rules, strengthening the supply chain rules engine that powers MAX, SPS's AI agent. By leveraging SPS's network intelligence within everyday workflows, MAX enables customers to interact with their supply chains in a more intuitive, proactive, and connected way. Users can instantly compare business requirements and business performance between major retailers like Target and Costco. With proactive monitoring, MAX serves up 24/7 extension of a customer's team, detecting anomalies and flagging critical business errors.

MAX puts the expertise of the SPS network at the customer's fingertips to instantly diagnose business issues and determine actionable solutions, shortening the time it takes to address risks in trading partner relationships. For example, Branch is a fast-growing wholesale brand selling to major retailers like Williams-Sonoma, Lumen, and Office Depot. They rely on SPS Commerce to manage order flows across multiple channels and have already experienced significant efficiencies using MAX to resolve order issues in minutes as opposed to days. For one of their key retail partners, MAX helped achieve 90% weekly time savings in managing overdue orders. Other customers have recognized tangible results since MAX's beta phase launch. MAX successfully caught a $290,000 invoice failure due to an incorrect UPC code. It identified 100 stalled drop ship orders for an outdoor brand.

It flagged $70,000 in unacknowledged purchase orders for a food manufacturer. Delivering this immediate ROI, MAX is quickly becoming the default starting point for customers inside the SPS user interface. They trust MAX's proprietary supply chain expertise, and they are increasingly allowing it to take automated actions on their behalf, continually improving operational efficiencies with their trading partners. By pairing SPS's network intelligence with our agentic capabilities, we completed our first AI-powered customer onboarding, including pre-sale contacts and account provisioning. We're working toward a future where agentic technology can engage a new customer immediately after a deal closes, with more of the onboarding processes shifting to AI as we continue to reduce the time it takes for customers to transact with their trading partners.

Agent-assisted customer functions and onboarding, as well as the agentification of our internal operations, are the two pillars in our agent strategy already in motion at SPS. We are also exploring new AI-powered use cases and products which we believe will drive our pool expansion and increase the size of our addressable market. The initial launch of MAX to all SPS Fulfillment customers is expected by the end of the summer, and we plan to launch additional products at scale later this year. One of the key learnings from our beta program is that users of MAX through the chat interface are more likely to explore advanced MAX features, and we expect this usage trend will define the path to monetization of our AI solutions. We are excited about these AI capabilities and the immense value they will bring to our network, and so are our customers.

In a recent study of SPS customers, we quantified and validated the value and impact SPS delivers to their business. 83% of customers said that the data in the SPS network improved their AI readiness. 87% cited improved scalability. 100% of the surveyed customers said that without the SPS network, they would need more headcount, more tools, and more time, or in some cases, simply could not operate at the scale they do today. They see SPS as a strategic partner in navigating increasing supply chain complexity while they expand their business and trading network. Chosen Foods, a premier food and beverage company best known as America's number one avocado oil brand, needed a supply chain that could keep pace with growth across their U.S. and Canadian operations.

Over their decade-long relationship with SPS Commerce, they have scaled from one trading partner to dozens of customers, multiple 3PLs, and a growing supplier network. To prepare for their next phase of growth, Chosen Foods migrated to a new ERP and trusted SPS to manage the transition. Through a fully integrated Acumatica deployment, SPS Commerce delivered a unified approach across their order-to-cash, procure-to-pay, and Revenue Recovery workflows ahead of schedule and with zero operational downtime. Crucially, with growing deduction complexities across major retailers like Walmart, Amazon, and Target, SPS's automated dispute management successfully recovered approximately 30% of outstanding deductions, which represents hundreds of thousands of dollars, while helping Chosen Foods identify why these deductions occurred and how to prevent them.

Other customers realizing real ROI from SPS Revenue Recovery include Owlet, a leader in infant health technology, recovered $1.4 million within six months of using the solution, including 100% recovery on a recent settlement totaling $423,000. Serta Simmons Bedding, one of North America's largest bedding manufacturers, saved $200,000 by successfully challenging a post-audit with a large retailer. Turning to our Analytics business, SPS's new Analytics solution is now running on a new enhanced platform that delivers significant gains in both power and scale. This new platform brings an improved user experience while enabling faster time to insight. Customers can move seamlessly from data to decisions. It expands what's possible for customers, supporting growing data volumes, broader use cases, and future AI predictive capabilities.

With these platform enhancements, our Analytics solution helps customers protect revenue, margin, and shelf space by catching risks early while uncovering new growth opportunities across products, customers, markets, and distribution. It also gives teams the agility and efficiency to act sooner, align inventory, forecasting, and planning while strengthening retailer relationships with a single view of performance. RuffleButts, a children's clothing company based in Texas, is leveraging the platform to gain significantly better sell-through visibility into one of the nation's largest retailers, capturing critical insights from data across more than 400 retail locations and the retailer's e-commerce channel. To sustain this momentum, automated data feeds and scheduled reporting will drive ongoing day-to-day analysis. Early feedback from RuffleButts on the platform's granular product and location insights has been highly positive, prompting this supplier to consider adding another major retailer to their reporting.

In summary, SPS's customer success stories demonstrate that navigating today's increasingly complex supply chain requires an intelligent network. As businesses continue to expand across technology platforms and connect with new trading partners, they view SPS Commerce as a vital partner for scaling their operations and improving AI readiness. No other company can match the unique combination of AI capabilities, 25 years of proprietary data, deep domain expertise, and an expansive network access to drive this kind of tangible value and collaboration that SPS offers today. With that, I'll turn it over to Joe to discuss our financial results.