As retailers with stores and catalogs increasingly use those assets together with their web and mobile sites to appeal to consumers, retailers are working harder to let their customers know what products are available in each channel. That trend is helping to drive up demand for supply chain software from SPS Commerce Inc., the company says.
“2014 was another important year of growth for SPS Commerce. We experienced momentum across all areas of our business as we continued to take advantage of the shift toward omnichannel in the retail industry,” Archie Black, president and CEO, says.
For the year ended Dec. 31, 2014, SPS cited that demand as a major reason its total revenue increased 22.5%, to $127.9 million.
“As retailers and suppliers continued to realize the strategic importance of collaboration, the sharing of point-of-sale data continued to gain momentum,” Black said in a conference call with stock analysts, according to a transcript provided by Seeking Alpha. “In order to stay ahead of the competitive curve, while continuing to meet growing consumer demands, retailers are increasingly sharing POS data with suppliers.”
The collaboration trend is also helping SPS sell new web-based analytics products that are designed to help retailers and suppliers view and analyze information on sales of particular product lines, helping them to better plan production and merchandising campaigns. “New revenue from our analytics products grew more than 50%, and contributed 18% of our revenue,” Black said on the conference call, comparing 2014 with 2013.
But there is plenty of room for SPS to growing along with the supply chain collaboration trend, which is still in its early stages, he added. While some retailers like Foot Locker Europe have started to share customer sales data with suppliers like footwear brand Adidas, only about one-fifth of SPS retailer clients—and the same share of the retail world in general—are providing sales data to suppliers, historically the kind of information retailers have held close to their vests. “The retail world is behind on sharing analytics,” Black said. “We’re at 20% or less.”
Nonetheless, Black said he felt encouraged that more retailers and suppliers will move toward sharing data, further driving up demand for SPS’s products. The company is offering two supply chain analytics products: Shared View, an application designed for a supplier and one retailer shared and analyze data, and an “enterprise” version designed to let a supplier analyze data from multiple retailers.
SPS also reported for the full year ended Dec. 31:
Total revenue increased 22.5% to $127.9 million from $104.4 million the prior year;
Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, increased 32% to $18.2 million from $13.8 million;
Net income increased 145.4% to $2.7 million from $1.1 million.
For the fourth quarter ended Dec. 31, 2014, SPS reported:
Revenue was $35.4 million, up 26.4% from $28.0 million a year earlier.
Net income was $854,000, up 190.5% from $294,000;
Adjusted EBITDA increased 33% to $5.0 million from $3.76 million.
SPS, which trades on the Nasdaq market under the symbol SPSC, had a stock price of $68.66 at the close of markets on Friday, up from $63.99 the day before but down from its 52-week high of $71.15 on March 7.
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