SPSC · SPS Commerce
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $92.63
Note written ·
Price against the kill line
12.2% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $92.63, on record since 11 November 2026. The shares are up 6.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $92.63, which would put the shares back near their late-October highs and show them leading the S&P 500. A signed GTCR agreement, or fourth-quarter revenue above the $201.3 million top of the guide, would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 29 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 198
- Revenue, change on a year (%)
- +4.1
- Gross margin (%)
- 71.1
- Operating margin (%)
- 20.2
- Free cash flow, four quarters ($M)
- 203
- Net cash, cash less debt ($M)
- 184
- Price to earnings (×)
- 34.7
- Enterprise value to sales (×)
- 3.5
All filed numbers
What SPS Commerce reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 198 | +4.1 | 71.1 | 20.2 |
| first filed | 198 | +5.6 | 70.2 | 4.3 |
| first filed | 192 | +5.8 | 69.2 | 12.8 |
| first filed | 193 | +12.7 | 70.4 | 18.0 |
| first filed | 190 | +16.0 | 69.5 | 16.4 |
| first filed | 187 | +22.0 | 68.1 | 14.1 |
| Pre-tax income ($M) | 41.3 |
| Net income ($M) four quarters: 83.1 | 30.7 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −4.7 |
| Operating cash flow ($M) | 232 |
| Capital spending ($M) | 28.9 |
| Free cash flow ($M) | 203 |
| Cash and short-term investments ($M) | 184 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 184 |
| Deferred revenue ($M) +0.6% on a year | 83.3 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 66.2 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 933 |
| Market value ($M) | 2,881 |
| Enterprise value, market value plus net debt ($M) no debt reported | 2,698 |
| Enterprise value to sales (×) no debt reported | 3.5 |
| Enterprise value to operating income (×) no debt reported | 25.1 |
| Price to earnings (×) | 34.7 |
| Price to book value (×) | 3.1 |
| Free-cash-flow yield (%) | 7.0 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 8.1% of shares outstanding sold short, 5.7 days of average trading to cover, +0.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $1.3M |
| 12 monthsfrom | $0 | $3.0M |
The thesis
SPS Commerce's shares are more likely to lag the S&P 500 over the next three months. The 29 October 2026 report cut 2026 revenue guidance for the second straight quarter, and the GTCR takeover talks Bloomberg reported on 11 September 2026 remain unconfirmed. A signed deal, or the 2027 outlook management said it will detail on its fourth-quarter call, settles it.
Profit is the strong part of the report. Third-quarter adjusted earnings per share (EPS) were $1.39 against a $1.23 estimate (Benzinga), and full-year adjusted EPS guidance rose to $5.05–$5.11. Revenue is the weak part: the full-year range fell to $786.9 million–$788.9 million.
The shares closed at $82.85 on 11 November 2026. The takeover hope is still in that price: on 11 September 2026, the day of the Bloomberg report, the shares reached an intraday high of $89.44, and they trade within a few percent of that today with no deal announced in SPS filings through 11 November 2026.
Bullish and bearish views on SPS Commerce, Inc.
The bull case on SPS Commerce, Inc. (SPSC), in brief: a named buyer was reported. The bear case: revenue guidance fell twice in three months.
Bull case
- A named buyer was reported. Bloomberg reported on 11 September 2026 that GTCR, a private-equity firm, was in talks to buy SPS, with an agreement possible within weeks. The report cited earlier coverage of a bank-run sale exploration (June) and a stake built by activist Irenic Capital (January).
- Profit is growing faster than sales. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 17% to $70.9 million in the third quarter, a 36% margin against 32% a year earlier, per the 29 October 2026 8-K. Net income was $30.7 million, or $0.85 a diluted share.
- Management blames Amazon for the cut. CFO Joseph Del Preto said on the 29 October 2026 call that "100%" of the revenue revision came from Amazon policy changes. Management put fourth-quarter underlying growth at 8–9%, excluding the divestiture and Amazon effects.
- Cash is going to repurchases. SPS bought back $48.8 million of stock in the third quarter, per the 29 October 2026 call, and held $153.8 million of cash and $29.7 million of short-term investments on 30 September 2026.
- The AI product gets a price in 2027. Management said on 29 October 2026 that its MAX agent will be charged for in 2027, with about 20 customers co-developing it.
Bear case
- Revenue guidance fell twice in three months. The full-year range went from $796.0M–$802.0M to $788.4M–$793.4M on 30 July 2026, then to $786.9M–$788.9M on 29 October 2026. Third-quarter revenue of $197.6 million grew 4%.
- The fourth-quarter guide sits below the estimate. SPS guided revenue to $199.3M–$201.3M against a $203.4M estimate, per Benzinga on 29 October 2026.
- The deal timetable has slipped. Bloomberg said on 11 September 2026 that an agreement could come within weeks. None has been announced, and management said on 29 October 2026 that repurchases are the main use of capital for the next 12–18 months, which reads like a standalone plan.
- Growth now leans on price. SPS reported about 46,700 recurring customers and $16,200 of average revenue per customer on 29 October 2026. Management expects the customer count to be close to net neutral.
- Insiders sold into the rally. SEC Form 4 filings show Chief Technology Officer Jamie Thingelstad exercised options at $56.25 and sold 11,196 shares at $81.59 on 6 November 2026. Director Marty Reaume exercised options at $59.00 and sold 4,536 shares at $86.86 on 3 November 2026. Two filings are too few to support a conclusion.
- Disintermediation argument is still open. Morgan Stanley downgraded the shares to Underweight on 21 July 2026, arguing that agent-to-agent commerce threatens the network. MAX has no disclosed revenue.
Price setup
The shares closed at $82.85 on 11 November 2026, up 4.4% over three months. That is 14.2% below the 52-week intraday high of $96.54 set on 29 January 2026. The 52-week closing low was $49.91 on 13 May 2026.
The shares sit just under the 50-day moving average of $83.46 and well above the 200-day moving average of $67.76. Recent closes were $85.24 on 4 November 2026, $82.58 on 5 November 2026, $81.91 on 6 November 2026, $81.04 on 9 November 2026, $80.92 on 10 November 2026 and $82.85 on 11 November 2026.
DA Davidson kept a Neutral rating and raised its target to $70 on 30 October 2026, the one analyst target change dated after the results report. That target sits below the close.
Catalysts ahead
- Undated: Outcome of the reported GTCR acquisition talks. A signed agreement, a denial or another buyer would settle how much takeover value the shares deserve.
- ~11 February 2027 (est.): Fourth-quarter 2026 results; the company has not announced a date. Tests the $199.3M–$201.3M revenue guide, and management said to expect more detail on 2027 on that call.
What would change the view
A daily close above $92.63, which would put the shares back near their late-October highs and show them leading the S&P 500. A signed GTCR agreement, or fourth-quarter revenue above the $201.3 million top of the guide, would also show the shares leading.
What it trades with
The largest recent moves trace to company news: a 7.06% gain on the 11 September 2026 takeover report and a fall of nearly 5% in after-hours trading after the 29 October 2026 guidance. The view is that the shares depend more on the deal outcome than on the broader market, and a signed cash agreement would tie them to the deal price. A sustained move in line with other application-software shares and no company news would contradict that view. The Morgan Stanley argument of 21 July 2026 links SPS to the wider debate over AI agents and software.
The evidence, claim by claim (8)
- Third-quarter revenue was $197.6M, up 4%; net income $30.7M or $0.85 per diluted share; adjusted EBITDA $70.9M, up 17%, a 36% margin against 32%. SPS Commerce 8-K, Q3 2026 results · as of
- Full-year 2026 revenue guidance fell to $786.9M–$788.9M from $788.4M–$793.4M; adjusted EPS guidance rose to $5.05–$5.11 from $4.84–$4.93. SPS Commerce 8-K, Q3 2026 results; Benzinga · as of
- Fourth-quarter revenue guidance of $199.3M–$201.3M compares with a $203.409M estimate. SPS Commerce 8-K; Benzinga · as of
- The CFO attributed the full revenue revision to Amazon policy changes; management put fourth-quarter underlying growth at 8–9%, excluding the divestiture and Amazon effects. Q3 2026 earnings call transcript, Motley Fool · as of
- SPS reported about 46,700 recurring customers and $16,200 of average revenue per customer, and repurchased $48.8M of stock in the quarter. Q3 2026 earnings call transcript, Motley Fool; 8-K · as of
- Bloomberg reported GTCR in talks to acquire SPS Commerce, with an agreement possible in the coming weeks; talks could fail or another buyer could emerge; both sides declined comment. Bloomberg News, via Bloomberg Law · as of
- DA Davidson kept a Neutral rating and raised its price target to $70. Benzinga · as of
- CTO Jamie Thingelstad exercised options at $56.25 and sold 11,196 shares at $81.59 on 6 November 2026; director Marty Reaume exercised options at $59.00 and sold 4,536 shares at $86.86 on 3 November 2026. SEC Form 4 filings (10 November 2026 and 5 November 2026) · as of
Sources
- SPS COMMERCE INC - Form 8-K - FY2026 · sec.gov
- SPS Commerce (SPSC) Q3 2026 Earnings Call Transcript · fool.com ·
- GTCR Said to Be in Talks to Buy Software Maker SPS Commerce (1) · news.bloomberglaw.com
- GTCR takeover talks push SPS Commerce to $89.44; 20%-40% premiums imply 11.9x-13.9x EBITDA · ctol.digital
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