This Supply Chain Stock Plummets 24%. Why Amazon Is Part of the Story.

Many of SPS Commerce’s clients are Amazon third-party sellers. (Oli Scarff/Getty Images)

Key Points

• SPS Commerce falls after providing disappointing guidance.
• Third-quarter earnings of $1.13 a share exceed Wall Street estimates, while revenue of $189.9 million misses forecasts.
• The company’s revenue recovery platform faced unexpected seasonality and Amazon policy changes, impacting third-quarter performance and future outlook.

Shares of SPS Commerce plummeted Friday after the supply-chain service provider beat quarterly earnings expectations but issued disappointing guidance.

The company posted earnings of $1.13 a share for the third quarter, above analysts’ consensus estimates of $1.02. Revenue totaled $189.9 million, below Wall Street’s call for $192.1 million but up 16% from the year prior.

SPS was down 24% on Friday, putting the stock on pace for its lowest close since 2020 and its largest single-day decline on record, according to Dow Jones Market Data. Shares had declined 44% already this year as of Thursday’s close.

The company reported trouble for its revenue recovery platform, which helps suppliers reclaim lost revenue from retailer deductions. After Amazon.com’s Prime Day drove the segment to a strong second quarter, shipment volume came in below expectations in the third quarter. Many of the company’s customers are Amazon third-party sellers.

“We now recognize that there is more seasonality in this business than we had originally anticipated,” CEO Chadwick Collins said of the revenue recovery business on a conference call. He added that Amazon’s policy changes around inventory capacity for third-party sellers also weighed on results.

SPS expects those dynamics to continue in the fourth quarter. The company forecast year-over-year revenue growth of 13% to 14%, representing a deceleration from earlier in the year. Adjusted earnings are expected to range between 98 cents and $1.02 a share, below the $1.05 a share analysts had estimated.

Write to Nate Wolf at nate.wolf@barrons.com