SPS Commerce Says Amazon Changes Explain Its Guidance Cut — Otherwise, It Would Have Raised
The CFO said new Amazon policies and a faster move to subscriptions drove the outlook, with fourth-quarter revenue guided to $199.3 million to $201.3 million.
SPS Commerce Chief Financial Officer Joe said on the company's third-quarter earnings call Thursday that "100% of that was related to these Amazon policy changes" and a faster customer shift from take rate to subscription, and that without them "we would have, you know, raised guidance on the year." SPS, which runs a cloud-based supply chain network connecting retailers, brands and suppliers, guided fourth-quarter revenue to $199.3 million to $201.3 million.
Amazon rules, not core demand
Answering a Needham analyst, the CFO tied the whole revision to Amazon's rule changes and the quicker conversion of customers from take rate to subscription. Under the take-rate model, revenue is a percentage of funds actually recovered for suppliers selling to Amazon, so it moves with Amazon's policies.
CEO Chad Collins said the changes involved short shipments by suppliers to Amazon and the ability to re-dispute a submission. The CFO added that both were new in the quarter.
Pressed by a Baird analyst on the math, the CFO said a majority of the Amazon-related drag came from the policy changes, with the take-rate-to-subscription conversion a smaller portion. The divestiture of the 3P recovery business, completed June 30, together with the Amazon take-rate impact cut third-quarter revenue growth by 500 basis points, or 5 percentage points. Revenue was $197.6 million, up 4%.
Guidance and the core business
For the fourth quarter, the company expects roughly 4% growth at the midpoint. Excluding the Amazon and divested businesses, the CFO said underlying growth would be 8% to 9%. Full-year revenue is guided to $786.9 million to $788.9 million, with underlying growth in the high single digits.
The CFO said the core beat plan on three counts: stronger revenue per customer from retail campaigns, retention ahead of plan, and momentum in subscription revenue recovery. Adjusted EBITDA rose 17% to $70.9 million, or 36% of revenue.
The 1P Amazon recovery business, where SPS recovers funds for suppliers, has a $750 million addressable market, the CFO said.
Subscriptions and what comes next
SPS is leading with subscriptions, but Collins said the company will still need some take-rate offering for at least the next couple of years because of competition. He said most Carbon 6 customers acquired were on take rates, and only a minority have converted so far.
The company will give 2027 color and an updated adjusted EBITDA target on its fourth-quarter call, the CFO said.
The CFO said he would not give 2027 guidance now, but that momentum in the core business should carry into next year.
Sources
- SPS Commerce: Q3 Earnings Snapshot – WTOP News — wtop.com
- SPS Commerce Reports Strong Third Quarter 2026 Financial — globenewswire.com
