SPS COMMERCE INC

Previous wording

Revenues - The increase in revenue period-over-period resulted from an increase in 1P recurring revenue customers that was driven primarily by business acquisitions and continued business growth in our core markets.

Current wording

Revenues - The increase in revenue period-over-period resulted from an increased usage of our products by our 1P recurring revenue customers.

Previous wording

•ARPU increased 14% to approximately $15,100 for the three months ended June 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.

Current wording

•ARPU increased 22% to approximately $16,200 for the three months ended September 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.

Previous wording

•The number of recurring revenue customers decreased 14% to approximately 46,650 at June 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business, which resulted in a decrease of approximately 8,200 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.

Current wording

•The number of recurring revenue cust omers decreased 15% to approximately 46,700 at September 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business, which resulted in a decrease of approximately 8,050 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.

Previous wording

Recurring revenues increased 6% to $190.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Recurring revenues accounted for 96% of our total revenues for both the three months ended June 30, 2026 and 2025. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.

Current wording

Recurring revenues increased 4% to $189.0 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Recurring revenues accounted for 96% of our total revenues for both the three months ended September 30, 2026 and 2025. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.

Previous wording

Cost of Revenues - The decrease in cost of revenues was primarily attributable to $1.7 million lower third-party personnel costs and $0.9 million lower software costs due to platform consolidation, partially offset by a $1.5 million increase in depreciation expense.

Current wording

Cost of Revenues - The decrease in cost of revenues was primarily attributable to a $2.7 million decrease in third-party personnel costs and a $0.4 million decrease in occupancy and software costs, partially offset by a $1.2 million increase in personnel-related costs, primarily due to higher benefits from increased claims, and by a $0.9 million increase in internally-developed software depreciation expense.

Previous wording

General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $2.8 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of

Current wording

General and Administrative Expenses - The decrease in general and administrative expense was primarily driven by a $1.1 million decrease in expense reflecting the timing of funding the SPS Foundation and a $0.9 million decrease in

Previous wording

Amortization of Intangible Assets -The decrease in amortization expense was primarily due to the normal run-off of amortization related to finite-lived intangible assets.

Current wording

Amortization of Intangible Assets -The increase in amortization expense was primarily due to the change in the estimated useful life of certain developed technology intangible assets acquired in the Carbon6 acquisition, partially offset by the normal run-off of amortization related to finite-lived intangible assets.

Previous wording

Adjusted EBITDA -Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the six months ended June 30, 2026 included the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs. Net income is the most directly comparable GAAP measure of financial performance.

Current wording

Adjusted EBITDA -Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the three months ended September 30, 2026, included asset disposals. Net income is the most directly comparable GAAP measure of financial performance.

Previous wording

Non-GAAP Income per Share -Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the six months ended June 30, 2026, the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

Current wording

Non-GAAP Income per Share -Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the three months ended September 30, 2026, asset disposals, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

Previous wording

Revenues - The increase in revenue period-over-period resulted from an increase in 1P recurring revenue customers that was driven primarily by business acquisitions and continued business growth in our core markets.

Current wording

Revenues - The increase in revenue period-over-period resulted from an increased usage of our products by our 1P recurring revenue customers.

Previous wording

•ARPU increased 5% to approximately $14,800 for the six months ended June 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.

Current wording

•ARPU increased 5% to approx imately $14,850 for the nine months ended September 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.

Previous wording

•The number of recurring revenue customers decreased 14% to approximately 46,650 at June 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business (initially acquired in February 2025 as part of the Carbon6 acquisition), which resulted in a decrease of approximately 8,200 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.

Current wording

•The number of recurring revenue customers decreased 15% to approximately 46,700 at September 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business (initially acquired in February 2025 as part of the Carbon6 acquisition), which resulted in a decrease of approximately 8,050 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.

Previous wording

Recurring revenues increased 7% to $374.9 million for the six months ended June 30, 2026 compared to thesix months ended June 30, 2025. Recurring revenues accounted for 96% and 95% of our total revenues for the six months ended June 30, 2026 and 2025, respectively. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.

Current wording

Recurring revenues increased 6% to $563.9 million for the nine months ended September 30, 2026 compared to thenine months ended September 30, 2025. Recurring revenues accounted for 96% and 95% of our total revenues for the nine months ended September 30, 2026 and 2025, respectively. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.

Previous wording

Cost of Revenues - The increase in cost of revenues was primarily driven by a $2.1 million increase in depreciation expense and a $1.3 million increase in deferred costs due to lower capitalization associated with slower hiring. These increases were partially offset by a $0.9 million decrease in personnel-related costs and $1.1 million of lower software costs due to platform consolidation.

Current wording

Cost of Revenues - The increase in cost of revenues was primarily driven by a $3.1 million increase in depreciation expense and a $1.4 million increase in deferred costs due to lower capitalization associated with slower hiring. These increases were partially offset by a $2.4 million decrease in personnel-related costs, including third-party personnel, and $1.3 million of lower software costs due to platform consolidation.

Previous wording

Sales and Marketing Expenses - The increase in sales and marketing expense was primarily driven by a $2.4 million increase in stock-based compensation expense, partially attributable to equity awards granted to executives hired in the prior year, and a $1.3 million increase in third-party personnel costs.

Current wording

Sales and Marketing Expenses - The increase in sales and marketing expense was primarily driven by a $3.1 million increase in stock-based compensation expense, partially attributable to equity awards granted to executives hired in the prior year, a $2.1 million increase in third-party personnel costs, and a $0.6 million increase in sales enablement software costs. These increases were partially offset by a $1.0 million decrease in partner and reseller fees due to the divestiture.

Previous wording

Research and Development Expenses - The decrease in research and development expense was primarily driven by a $0.4 million decrease in depreciation expense resulting from lower capitalized research and development activities related to an acquired business.

Current wording

Research and Development Expenses - The decrease in research and development expense was primarily driven by a $1.5 million decrease in personnel-related costs, reflecting lower headcount and reduced third-party personnel costs,

Previous wording

General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $4.9 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of equity awards upon executive retirement. In addition, personnel-related costs increased by $5.0 million, primarily due to increased headcount and non-capitalizable activities supporting system implementations, as well as consulting costs related to internal initiatives.

Current wording

General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $6.2 million increase in personnel-related costs, including third-party personnel, due to consulting costs related to internal initiatives and non-capitalizable activities supporting system implementations, and a $5.3 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of equity awards upon executive retirement. Hardware and software costs also increased by $2.2 million, primarily due to higher amortization expense related to system implementations. These increases were partially offset by a $3.1 million decrease in other expenses, reflecting the timing of funding of the SPS Foundation and a decrease in sales and use tax expense.

Previous wording

Amortization of Intangible Assets - The increase in amortization of intangible assets was driven by an additional month of amortization related to intangible assets acquired from Carbon6 in February 2025.

Current wording

Amortization of Intangible Assets - The increase in amortization of intangible assets was driven by an additional month of amortization related to intangible assets acquired from Carbon6 in February 2025 and the change in the estimated useful life of certain developed technology intangible assets acquired from Carbon6, partially offset by the normal run-off of amortization related to finite-lived intangible assets.

Previous wording

Other Income, Net - The increase in other income, net was primarily due to higher investment income, the favorable remeasurement of an acquisition-related earn-out liability, and an increase in unrealized foreign currency gains.

Current wording

Other Income, Net - The increase in other income, net was primarily due to the remeasurement of an acquisition-related earn-out liability and higher investment income from interest earned on a larger cash and investments balance, partially offset by lower interest rates in 2026.

Previous wording

Income Tax Expense -The decrease in income tax expense was primarily driven by the reduction in pre-tax book income related to the loss on sale of business. The decrease was partially offset by the reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price.

Current wording

Income Tax Expense - Income tax expense remained relatively consistent compared to the prior year period. The decrease in pre-tax book income and the tax benefits associated with foreign-derived deduction-eligible income were offset by the reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price.

Previous wording

Adjusted EBITDA -Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the three months ended June 30, 2026, included the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs. Net income is the most directly comparable GAAP measure of financial performance.

Current wording

Adjusted EBITDA -Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the nine months ended September 30, 2026 included the remeasurement of an acquired earn-out liability, asset disposals, and the net impact of divestiture-related exit and disposal activity. Net income is the most directly comparable GAAP measure of financial performance.

Previous wording

Non-GAAP Income per Share -Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the three months ended June 30, 2026, the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

Current wording

Non-GAAP Income per Share -Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the nine months ended September 30, 2026, the remeasurement of an acquired earn-out liability, asset disposals, net impact of divestiture-related exit and disposal activity, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.

Previous wording

A critical accounting policy or estimate is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective, or complex judgments relating to uncertain matters that could have a material effect on our financial condition and results of operations. Accordingly, we believe that our policies for revenue recognition, internally developed software, and business combinations are the most critical to fully understand and evaluate our financial condition and results of operations.

Current wording

A critical accounting policy or estimate is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective, or complex judgments relating to uncertain matters that could have a material effect on our financial condition and results of operations. Accordingly, we believe that our policies for revenue recognition, internally developed software, business combinations, and the useful lives of long-lived assets, including acquired intangible assets, are the most critical to fully understand and evaluate our financial condition and results of operations.

Previous wording

During the six months ended June 30, 2026, there were no changes in our critical accounting policies or estimates. For additional information regarding our critical accounting policies and estimates, see the discussion under"Critical Accounting Policies and Estimates" in"Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.

Current wording

For additional information regarding our critical accounting policies and estimates, see the discussion under"Critical Accounting Policies and Estimates" in"Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.

Previous wording

As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents of $173.2 million and net accounts receivable of $63.7 million.

Current wording

As of September 30, 2026, our principal sources of liquidity were cash and cash equivalents and short-term investments of $183.5 million and net accounts receivable of $66.2 million. Our investments are selected in accordance with our investment policy, with a goal to preserve principal, provide liquidity, and maximize income consistent with minimizing risk of material loss. Our cash equivalents and short-term investments are generally held in highly liquid money market funds and commercial paper.

Previous wording

Theincrease in cash provided by operating activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to an increase in net income, as adjusted for non-cash expenses of $19.0 million. Additionally, fluctuations in operating assets and liabilities resulted in an increase of $30.4 million driven by changes in the amount and timing of settlements.

Current wording

The increase in cash provided by operating activities from the nine months ended September 30, 2025 to the nine months ended September 30, 2026 was primarily due to a $12.8 million increase in net income adjusted for non-cash items. Additionally, fluctuations in operating assets and liabilities resulted in an increase of $40.0 million driven by changes in the amount and timing of settlements.

Previous wording

Thedecrease in cash used in investing activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to cash used in the prior year to acquire a business of $142.6 million.

Current wording

The decrease in cash used in investing activities from the nine months ended September 30, 2025 to the nine months ended September 30, 2026 was primarily due to cash used in the prior year to acquire a business of $142.6 million partially offset by $29.4 million of net cash used to purchase investments in the current year.

Previous wording

Theincrease in cash used in fina ncing activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to an increase in cash used for share repurchases of $38.8 million year-over-year to continue to deliver shareholder value.

Current wording

The increase in cash used in financing activities from the nine months ended September 30, 2025 to the nine months ended September 30, 2026 was primarily due to an increase in cash used for share repurchases of $57.6 million year-over-year to continue to deliver shareholder value.

Previous wording

(1)Operating lease obligations include imputed interest and are presented net of lease incentives deemed payable at lease commencement. We expect to utilize approximately $18 million of the available lease incentives under the sixth amendment to our current headquarters lease during the year ending December 31, 2027, with the approximately remaining $15 million to be utilized thereafter.

Current wording

(1)Operating lease obligations include imputed interest and are presented net of lease incentives deemed payable at lease commencement. We expect to utilize approximately $14 million of the available lease incentives under the sixth amendment to our current headquarters lease during the year ending December 31, 2027, with the approximately remaining $19 million to be utilized thereafter.