SPS Commerce, Inc. is a cloud-based supply chain management solutions provider, offering a platform that enhances the way retailers, suppliers, grocers, distributors, and logistics firms manage and fulfill omnichannel orders. The company's products enable customers to increase supply chain performance, optimize inventory levels and sell-through, reduce operational costs, improve order visibility, and satisfy consumer demands for a seamless omnichannel experience. As of December 31, 2023, SPS Commerce had approximately 44,800 recurring revenue customers with ongoing contracts to pay monthly fees.
In the year ended December 31, 2023, SPS Commerce reported a total revenue of $536.9 million, representing a 19.1% increase from the previous year. Recurring revenues increased by 20% to $502 million, accounting for 94% of the total revenues. The number of recurring revenue customers increased by 6% to approximately 44,800, while the average recurring revenues per customer, also known as wallet share, increased by 10% to approximately $11,550.
The company's cost of revenues increased by 18.9%, primarily due to increased headcount resulting in higher personnel-related costs and software subscriptions. Sales and marketing expenses increased by 20.8%, driven by increased headcount and variable compensation earned by sales personnel and referral partners. Research and development expenses increased by 17.3%, primarily due to increased headcount and software subscriptions. General and administrative expenses also increased by 26.1%, driven by higher personnel-related costs and professional services fees.
SPS Commerce's net income for the year ended December 31, 2023, was $65.8 million, representing a 19.4% increase from the previous year. The company also reported other income of $8.3 million, primarily from realized gains from foreign currency on cash and investments held and investment income. The company's income tax expense for the year was $19.7 million, representing a 21.9% increase from the previous year.
SPS Commerce uses non-GAAP financial measures such as Adjusted EBITDA and Adjusted EBITDA Margin to compare performance to prior periods for trend analyses and planning purposes. The company believes these non-GAAP financial measures provide useful information to its management, board of directors, and investors regarding certain financial and business trends relating to its financial condition and results of operations.
Today the company's shares have moved -3.1% to a price of $180.96. For more information, read the company's full 10-K submission here.
