10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: June 30, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                      to                     

Commission file number 001-34702

SPS COMMERCE, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	41-2015127
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

333 South Seventh Street, Suite 1000, Minneapolis, MN 55402

(Address of Principal Executive Offices, Including Zip Code)

(612) 435-9400

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the registrant’s common stock, par value $0.001 per share, outstanding at July 24, 2014 was 16,234,758 shares.

SPS COMMERCE, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013		3
	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013 (unaudited)		4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013 (unaudited)		5
	Notes to Condensed Consolidated Financial Statements (unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		18
Item 4.	Controls and Procedures		18
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		19
Item 1A.	Risk Factors		19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3.	Defaults Upon Senior Securities		19
Item 4.	Mine Safety Disclosures		19
Item 5.	Other Information		19
Item 6.	Exhibits		19
Signatures			20

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains forward-looking statements regarding us, our business prospects and our results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We expressly disclaim any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Commission that advise interested parties of the risks and factors that may affect our business.

2

PART I. – FINANCIAL INFORMATION

Item 1. Financial Statements

SPS COMMERCE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in thousands, except share amounts)

	June 30,			December 31,
	2014			2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	136,508		$	131,294
Accounts receivable, less allowance for doubtful accounts of $242 and $237, respectively		13,348			11,611
Deferred costs, current		10,415			9,048
Deferred income taxes, current		1,272			1,272
Prepaid expenses and other current assets		3,346			2,850
Total current assets		164,889			156,075
PROPERTY AND EQUIPMENT, net		9,036			9,922
GOODWILL		25,487			25,487
INTANGIBLE ASSETS, net		15,683			17,082
OTHER ASSETS
Deferred costs, net of current portion		4,578			3,684
Deferred income taxes, net of current portion		10,294			10,870
Other non-current assets		205			210
	$	230,172		$	223,330
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	2,999		$	1,798
Accrued compensation and benefits		7,639			7,981
Accrued expenses and other current liabilities		1,805			2,801
Deferred revenue, current		6,912			6,335
Total current liabilities		19,355			18,915
OTHER LIABILITIES
Deferred revenue, less current portion		10,017			8,785
Deferred rent		2,663			2,857
Total liabilities		32,035			30,557
COMMITMENTS and CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding		—			—
Common stock, $0.001 par value; 55,000,000 shares authorized; 16,230,057 and 16,092,121 shares issued and outstanding, respectively		16			16
Additional paid-in capital		243,901			239,549
Accumulated deficit		(45,780	)		(46,792	)
Total stockholders’ equity		198,137			192,773
	$	230,172		$	223,330

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

SPS COMMERCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Revenues	$	31,100		$	25,658		$	60,039		$	49,410
Cost of revenues		9,627			7,943			18,882			15,009
Gross profit		21,473			17,715			41,157			34,401
Operating expenses
Sales and marketing		11,570			9,647			22,454			18,872
Research and development		3,365			2,657			6,339			5,160
General and administrative		4,842			4,211			9,353			8,258
Amortization of intangible assets		682			717			1,399			1,434
Total operating expenses		20,459			17,232			39,545			33,724
Income from operations		1,014			483			1,612			677
Other income (expense)
Interest income		50			22			99			45
Other income (expense), net		35			(48	)		(21	)		(132	)
Total other income (expense), net		85			(26	)		78			(87	)
Income before income taxes		1,099			457			1,690			590
Income tax expense		(460	)		(169	)		(678	)		(103	)
Net income	$	639		$	288		$	1,012		$	487
Net income per share
Basic	$	0.04		$	0.02		$	0.06		$	0.03
Diluted	$	0.04		$	0.02		$	0.06		$	0.03
Weighted average common shares used to compute net income per share
Basic		16,210			15,076			16,183			14,983
Diluted		16,768			15,785			16,799			15,677

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

SPS COMMERCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in thousands)

	Six Months Ended
	June 30,
	2014			2013
Cash flows from operating activities
Net income	$	1,012		$	487
Reconciliation of net income to net cash provided by operating activities
Deferred income taxes		576			31
Depreciation and amortization of property and equipment		2,823			2,353
Amortization of intangible assets		1,399			1,434
Provision for doubtful accounts		323			185
Stock-based compensation		2,698			2,035
Changes in assets and liabilities
Accounts receivable		(2,060	)		(951	)
Deferred costs		(2,260	)		(1,265	)
Prepaid expenses and other current assets		(491	)		2,512
Accounts payable		1,202			(207	)
Accrued compensation and benefits		(342	)		473
Accrued expenses and other current liabilities		421			497
Deferred rent		(170	)		—
Deferred revenue		1,809			1,049
Net cash provided by operating activities		6,940			8,633
Cash flows from investing activities
Purchases of property and equipment		(3,380	)		(1,737	)
Net cash used in investing activities		(3,380	)		(1,737	)
Cash flows from financing activities
Net proceeds from exercise of options to purchase common stock		922			1,597
Excess tax benefit from exercise of options to purchase common stock		60			40
Net proceeds from employee stock purchase plan		672			551
Net cash provided by financing activities		1,654			2,188
Net increase in cash and cash equivalents		5,214			9,084
Cash and cash equivalents at beginning of period		131,294			66,050
Cash and cash equivalents at end of period	$	136,508		$	75,134

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

SPS COMMERCE, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE A – General

Business Description

We are a leading provider of cloud-based supply chain management solutions, providing prewired, proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. We provide our solutions through the SPS Commerce platform, a cloud-based software suite that improves the way suppliers, retailers, distributors and other customers manage and fulfill orders. We derive the majority of our revenues from thousands of monthly recurring subscriptions from businesses that utilize our solutions.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of SPS Commerce, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP. We have included all normal recurring adjustments considered necessary to give a fair statement of our financial position, results of operations and cash flows for the interim periods shown. Operating results for these interim periods are not necessarily indicative of the results to be expected for the full year. The December 31, 2013 condensed consolidated balance sheet data was derived from our audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying notes for the year ended December 31, 2013 included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 20, 2014.

Use of Estimates

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Significant Accounting Policies

During the six months ended June 30, 2014, there were no material changes in our significant accounting policies. See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 20, 2014, for additional information regarding our significant accounting policies.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued new accounting requirements for the recognition of revenue from contracts with customers. These new requirements are effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the impact of this guidance on our results of operations and financial position.

6

NOTE B – Goodwill and Intangible Assets, net

There was no change in our goodwill for the six months ended June 30, 2014.

Intangible assets included the following (in thousands):

	June 30, 2014							December 31, 2013
	Carrying		Accumulated					Carrying		Accumulated
	Amount		Amortization			Net		Amount		Amortization			Net
Subscriber relationships	$	23,160	$	(7,638	)	$	15,522	$	23,160	$	(6,376	)	$	16,784
Non-competition agreements		1,710		(1,549	)		161		1,710		(1,412	)		298
	$	24,870	$	(9,187	)	$	15,683	$	24,870	$	(7,788	)	$	17,082

Amortization expense for intangible assets was $682,000 and $1.4 million for the three and six months ended June 30, 2014, and $717,000 and $1.4 million for the three and six months ended June 30, 2013, respectively.

At June 30, 2014, future amortization expense for intangible assets was as follows (in thousands):

Remainder of 2014	$	1,288
2015		2,578
2016		2,578
2017		2,557
2018		2,062
Thereafter		4,620
	$	15,683

NOTE C – Line of Credit

We have a revolving credit agreement with JPMorgan Chase Bank, N.A. which provides for a $20 million revolving credit facility that we may draw upon from time to time, subject to certain terms and conditions, and will mature on September 30, 2016.

There were no borrowings outstanding at June 30, 2014 and we were in compliance with all covenants under the revolving credit agreement as of that date.

NOTE D – Stock-Based Compensation

Our equity compensation plans provide for the grant of incentive and nonqualified stock options, as well as other stock-based awards including restricted stock and restricted stock units, to employees, non-employee directors and other consultants who provide services to us. Restricted stock awards result in the issuance of new shares when granted. For other stock-based awards, new shares are issued when the award is exercised, vested or released according to the terms of the agreement. In January 2014, 965,527 additional shares were reserved for future issuance under our 2010 Equity Incentive Plan. At June 30, 2014, there were approximately 2.6 million shares available for grant under approved equity compensation plans.

7

We recorded non-cash stock-based compensation expense of $1.4 million and $2.7 million for the three and six months ended June 30, 2014, and $1.1 million and $2.0 million for the three and six months ended June 30, 2013, respectively. This expense was allocated as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of revenues	$	152	$	122	$	305	$	225
Operating expenses
Sales and marketing		472		386		954		728
Research and development		95		63		188		124
General and administrative		640		540		1,251		958
Total stock-based compensation expense	$	1,359	$	1,111	$	2,698	$	2,035

As of June 30, 2014, there was approximately $10.9 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a straight line basis over a weighted average period of 2.8 years.

Stock Options

Stock options generally vest over four years and have a contractual term of seven to ten years from the date of grant. Our stock option activity was as follows:

				Weighted Average
	Options			Exercise Price
	(#)			($/share)
Outstanding at December 31, 2013		1,097,223		$	19.62
Granted		143,753			63.48
Exercised		(93,744	)		9.77
Forfeited		(9,883	)		40.50
Outstanding at June 30, 2014		1,137,349			25.79

Of the total outstanding options at June 30, 2014, 717,306 were exercisable with a weighted average exercise price of $16.66 per share. The total outstanding options had a weighted average remaining contractual life of 5.7 years.

The weighted average fair value per share of options granted during the first six months of 2014 was $24.69 and this was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Weighted-average volatility	43.7	%
Expected dividend yield	0	%
Expected life (in years)	4.4
Risk-free interest rate	1.06-1.55	%

Restricted Stock Units and Awards

Restricted stock units vest over four years and, upon vesting, the holder is entitled to receive shares of our common stock. With restricted stock awards, shares of our common stock are issued when the award is granted and the restrictions lapse over one year.

8

Our restricted stock units activity was as follows:

	Restricted Stock			Weighted Average
	Units			Grant Date Fair
	(#)			Value ($/share)
Outstanding at December 31, 2013		102,644		$	33.77
Granted		38,420			65.88
Vested and common stock issued		(26,557	)		32.27
Forfeited		(1,145	)		35.42
Outstanding at June 30, 2014		113,362			44.99

The number of restricted stock units outstanding at June 30, 2014 included 12,063 units that have vested but for which shares of common stock have not yet been issued pursuant to the terms of the agreement.

Our restricted stock awards activity was as follows:

	Restricted Stock			Weighted Average
	Awards			Grant Date Fair
	(#)			Value ($/share)
Outstanding at December 31, 2013		1,422		$	48.66
Restricted common stock issued		5,352			51.74
Restrictions lapsed		(2,523	)		50.29
Forfeited		(237	)		48.66
Outstanding at June 30, 2014		4,014			51.74

Employee Stock Purchase Plan

Our employee stock purchase plan allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The plan is available to all employees subject to certain eligibility requirements. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price that is the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period. The plan consists of two six-month offering periods, beginning on January 1 and July 1 of each calendar year. A total of 1.2 million shares of common stock are reserved for issuance under the plan.

For the offering period that began on January 1, 2014 and ended June 30, 2014, we withheld approximately $680,000 from employees participating in the plan. On June 30, 2014, approximately $672,000 of these funds was used to purchase 12,520 shares on behalf of the employees participating in the plan. The remaining funds are expected to be refunded to employees pursuant to the requirements of the plan.

For the three and six months ended June 30, 2014, we recorded approximately $95,000 and $201,000, respectively, of stock-based compensation expense associated with the employee stock purchase plan. The fair value was estimated based on the market price of our common stock at the beginning of each offering period and using the Black-Scholes option pricing model with the following assumptions:

Expected volatility	48.9	%
Expected dividend yield	0	%
Expected life (in years)	0.50
Risk-free interest rate	0.10	%

9

NOTE E – Income Taxes

We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pretax income and adjust the provision for discrete tax items recorded in the period. Differences between our effective tax rate and statutory tax rates are primarily due to the impact of meals and entertainment expense, employee stock purchase plan expense, as well as the federal R&D credit.

We recorded income tax expense of $460,000 and $678,000 for the three and six months ended June 30, 2014. We recorded income tax expense of $169,000 and $103,000 for the three and six months ended June 30, 2013. Our provisions for income taxes included current foreign and state income tax expense, as well as deferred tax expense.

We are subject to U.S federal income tax as well as income tax in various state and international jurisdictions. We are generally subject to tax examinations for all prior years due to our net operating loss carryforwards. As of June 30, 2014, we were not under any income tax audits by tax authorities.

As of June 30, 2014 we do not have any unrecognized tax benefits. It is our practice to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not expect any material changes in our unrecognized tax positions over the next 12 months.

NOTE F – Net Income Per Share

Basic net income per share has been computed using the weighted average number of shares of common stock outstanding during each period. Diluted net income per share also includes the impact of our outstanding potential common shares, including options and restricted stock units. Potential common shares that are anti-dilutive are excluded from the calculation of diluted net income per share.

The following table presents the components of the computation of basic and diluted net income per share for the periods indicated (in thousands, except per share amounts):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Numerator
Net income	$	639	$	288	$	1,012	$	487
Denominator
Weighted average common shares outstanding, basic		16,210		15,076		16,183		14,983
Options to purchase common stock		528		665		572		646
Restricted stock units		30		39		43		45
Employee stock purchase plan		—		5		1		3
Weighted average common shares outstanding, diluted		16,768		15,785		16,799		15,677
Net income per share
Basic	$	0.04	$	0.02	$	0.06	$	0.03
Diluted	$	0.04	$	0.02	$	0.06	$	0.03

The effect of approximately 126,000 and 16,000 outstanding potential common shares was excluded from the calculation of diluted net income per share for each of the three and six months ended June 30, 2014 and 2013, respectively, because they were anti-dilutive.

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a leading provider of cloud-based supply chain management solutions, providing prewired, proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. We provide our solutions through the SPS Commerce platform, a cloud-based software suite that improves the way suppliers, retailers, distributors and other customers manage and fulfill orders. We derive the majority of our revenues from thousands of monthly recurring subscriptions from businesses that utilize our solutions.

We plan to continue to grow our business by further penetrating the supply chain management market, increasing revenues from our customers as their businesses grow, expanding our distribution channels, expanding our international presence and, from time to time, developing new solutions and applications. We also intend to selectively pursue acquisitions that will add customers, allow us to expand into new regions or allow us to offer new functionalities.

For the three months ended June 30, 2014, our revenues were $31.1 million, an increase of 21% from the comparable period in 2013, and represented our 54^th consecutive quarter of increased revenues. Total operating expenses increased 19% and net income increased 122% for the same period in 2014 from 2013. Similar results were experienced for the six months ended June 30, 2014 with increased revenues of 22%, increased operating expenses of 17% and increased net income of 108% compared to the same period in 2013.

Key Financial Terms and Metrics

We have several key financial terms and metrics, including annualized average recurring revenues per recurring revenue customer, which we also refer to as wallet share. During the six months ended June 30, 2014, there were no changes in the definitions of our key financial terms and metrics, which are discussed in more detail under the heading “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, 2013 as filed with the Securities and Exchange Commission on February 20, 2014.

To supplement our financial statements, we also provide investors with Adjusted EBITDA and non-GAAP income per share, both of which are non-GAAP financial measures. We believe that these non-GAAP measures provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare the company’s performance to prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation. These measures are also presented to our board of directors.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”). These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in our financial statements and are subject to inherent limitations. Investors should review the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures that are included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

11

Critical Accounting Policies and Estimates

This discussion of our financial condition and results of operations is based upon our condensed consolidated financial statements, which are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

A critical accounting policy is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective or complex judgments for 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, the allowance for doubtful accounts, income taxes and stock-based compensation are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

During the six months ended June 30, 2014, there were no changes in our significant accounting policies or estimates. See Note A to our consolidated financial statements included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 20, 2014, for additional information regarding our accounting policies.

12

Results of Operations

The following table presents our results of operations for the periods indicated (dollars in thousands):

	Three Months Ended June 30,
	2014						2013						Change
				% of revenue						% of revenue			$			%
Revenues	$	31,100			100.0	%	$	25,658			100.0	%	$	5,442			21.2	%
Cost of revenues		9,627			31.0			7,943			31.0			1,684			21.2
Gross profit		21,473			69.0			17,715			69.0			3,758			21.2
Operating expenses
Sales and marketing		11,570			37.2			9,647			37.6			1,923			19.9
Research and development		3,365			10.8			2,657			10.4			708			26.6
General and administrative		4,842			15.6			4,211			16.4			631			15.0
Amortization of intangible assets		682			2.2			717			2.8			(35	)		(4.9	)
Total operating expenses		20,459			65.8			17,232			67.2			3,227			18.7
Income from operations		1,014			3.3			483			1.9			531			109.9
Other income (expense)
Interest income		50			0.2			22			0.1			28			127.3
Other income (expense), net		35			0.1			(48	)		(0.2	)		83			*
Total other income (expense), net		85			0.3			(26	)		(0.1	)		111			*
Income before income taxes		1,099			3.5			457			1.8			642			140.5
Income tax expense		(460	)		(1.5	)		(169	)		(0.7	)		291			172.2
Net income	$	639			2.1		$	288			1.1			351			121.9
	Six Months Ended June 30,
	2014						2013						Change
				% of revenue						% of revenue			$			%
Revenues	$	60,039			100.0	%	$	49,410			100.0	%	$	10,629			21.5	%
Cost of revenues		18,882			31.4			15,009			30.4			3,873			25.8
Gross profit		41,157			68.6			34,401			69.6			6,756			19.6
Operating expenses
Sales and marketing		22,454			37.4			18,872			38.2			3,582			19.0
Research and development		6,339			10.6			5,160			10.4			1,179			22.8
General and administrative		9,353			15.6			8,258			16.7			1,095			13.3
Amortization of intangible assets		1,399			2.3			1,434			2.9			(35	)		(2.4	)
Total operating expenses		39,545			65.9			33,724			68.3			5,821			17.3
Income from operations		1,612			2.7			677			1.4			935			138.1
Other income (expense)
Interest income		99			0.2			45			0.1			54			120.0
Other expense		(21	)		—			(132	)		(0.3	)		111			(84.1	)
Total other income (expense), net		78			0.1			(87	)		(0.2	)		165			*
Income before income taxes		1,690			2.8			590			1.2			1,100			186.4
Income tax expense		(678	)		(1.1	)		(103	)		(0.2	)		575			558.3
Net income	$	1,012			1.7		$	487			1.0			525			107.8

Due to rounding, totals may not equal the sum of the line items in the table above.

* Percentage is not meaningful.

13

Three and Six Months Ended June 30, 2014 compared to Three and Six Months Ended June 30, 2013

Revenues. Revenues for the three months ended June 30, 2014 increased $5.4 million, or 21%, to $31.1 million from $25.7 million for the same period in 2013. Revenues for the six months ended June 30, 2014 increased $10.6 million, or 22%, to $60.0 million from $49.4 million for the same period in 2013.

The increase in revenues for both the three and six month periods resulted from two primary factors: the increase in recurring revenue customers and the increase in annualized average recurring revenues per recurring revenue customer, which we also refer to as wallet share.

• The number of recurring revenue customers increased 10% to 20,745 at June 30, 2014 from 18,871 at June 30, 2013.

• Annualized average recurring revenues per recurring revenue customer, or wallet share, increased 12% to $5,467 for the three months ended June 30, 2014 from $4,869 for the same period in 2013. This increase in wallet share was primarily attributable to increased fees resulting from increased usage of our solutions by our recurring revenue customers and growth in larger customers.

Recurring revenues from recurring revenue customers accounted for 90% of our total revenues for each of the three and six months ended June 30, 2014, compared to 88% and 89%, respectively, for the same periods in 2013. We anticipate that the number of recurring revenue customers and wallet share will continue to increase as we increase the number of solutions we offer and increase the penetration of those solutions across our customer base.

Cost of Revenues. Cost of revenues for the three months ended June 30, 2014 increased $1.7 million, or 21%, to $9.6 million from $7.9 million for the same period in 2013. Cost of revenues for the six months ended June 30, 2014 increased $3.9 million, or 26%, to $18.9 million from $15.0 million for the same period in 2013. The increase in cost of revenues for the three and six month periods in 2014 was primarily due to increased headcount in 2014 which resulted in higher personnel costs. Also contributing to the increase for both periods were increased expenses for software subscriptions in 2014 as compared to 2013. As a percentage of revenues, cost of revenues was 31% for each of the three months ended June 30, 2014 and 2013, compared to 31% and 30%, respectively, for the same periods in 2013. Going forward, we anticipate that cost of revenues will increase in absolute dollars as we continue to expand our business.

Sales and Marketing Expenses. Sales and marketing expenses for the three months ended June 30, 2014 increased $1.9 million, or 20%, to $11.6 million from $9.6 million for the same period in 2013. Sales and marketing expenses for the six months ended June 30, 2014 increased $3.6 million, or 19%, to $22.5 million from $18.9 million for the same period in 2013. The increase in sales and marketing expenses for the three and six month periods in 2014 was primarily due to increased headcount in 2014, which resulted in higher personnel costs, as well as increased commissions earned by sales personnel from new business. We also had increased promotional, occupancy, depreciation and stock-based compensation expenses in 2014 as compared to 2013. As a percentage of revenues, sales and marketing expenses were 37% for each of the three and six months ended June 30, 2014 compared to 38% for each of the comparable periods in 2013. As we expand our business, we will continue to add resources to our sales and marketing efforts over time, and we expect that these expenses will continue to increase in absolute dollars.

Research and Development Expenses. Research and development expenses for the three months ended June 30, 2014 increased $708,000, or 27%, to $3.4 million from $2.7 million for the same period in 2013. Research and development expenses for the six months ended June 30, 2014 increased $1.2 million, or 23%, to $6.3 million from $5.2 million for the same period in 2013. The increased research and development expenses for the three and six month periods in 2014 were primarily due to increased headcount in 2014, which resulted in higher personnel costs. We also had increased expenses for depreciation in 2014 as compared to 2013. As a percentage of revenues, research and development expenses were 11% for each of the three and six months ended June 30, 2014, compared to 10% for each of the same periods in 2013. As we enhance and expand our solutions and applications, we expect that research and development expenses will continue to increase in absolute dollars.

14

General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2014 increased $631,000, or 15%, to $4.8 million from $4.2 million for the same period in 2013. General and administrative expenses for the six months ended June 30, 2014 increased $1.1 million, or 13%, to $9.4 million from $8.3 million for the same period in 2013. The increase in general and administrative expenses for the three and six month periods in 2014 was primarily due to increased stock-based compensation, legal costs and maintenance expenses for computer software and hardware in 2014 as compared to 2013. As a percentage of revenues, general and administrative expenses were 16% for each of the three months ended June 30, 2014 and 2013, compared to 16% and 17%, respectively, for the same periods in 2013. Going forward, we expect that general and administrative expenses will continue to increase in absolute dollars as we expand our business.

Income Tax Expense. We recorded income tax expense of $460,000 and $678,000 for the three and six months ended June 30, 2014. We recorded income tax expense of $169,000 and $103,000 for the three and six months ended June 30, 2013. Our provisions for income taxes included current foreign and state income tax expense, as well as deferred tax expense. We expect that our annual effective income tax rate will be approximately 40%.

The increase in income tax expense for the three and six months ended June 30, 2014, compared to the same periods in 2013, was primarily due to the increase in pretax book income in 2014. In addition, there was a discrete tax benefit of $117,000 in 2013 for the retroactive benefit of the 2012 federal R&D credit. The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013 and extended the federal R&D credit from January 1, 2012 through December 31, 2013.

Adjusted EBITDA. Adjusted EBITDA, which is a non-GAAP measure of financial performance, consists of net income plus depreciation and amortization, interest expense, interest income, income tax expense, non-cash, stock-based compensation expense and other adjustments as necessary for a fair presentation. For second quarter 2014, other adjustments included the impact of a use tax refund related to items previously expensed. The following table provides a reconciliation of net income to Adjusted EBITDA (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income	$	639		$	288		$	1,012		$	487
Depreciation and amortization of property and equipment		1,519			1,182			2,823			2,353
Amortization of intangible assets		682			717			1,399			1,434
Interest income		(50	)		(22	)		(99	)		(45	)
Income tax expense		460			169			678			103
Other		(69	)		—			(69	)		—
EBITDA		3,181			2,334			5,744			4,332
Stock-based compensation expense		1,359			1,111			2,698			2,035
Adjusted EBITDA	$	4,540		$	3,445		$	8,442		$	6,367

15

Non-GAAP Income Per Share. Non-GAAP income per share, which is also a non-GAAP measure of financial performance, consists of net income plus non-cash, stock-based compensation expense and amortization expense related to intangible assets divided by the weighted average number of shares of common stock outstanding during each period. The following table provides a reconciliation of net income to non-GAAP income per share (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Net income	$	639	$	288	$	1,012	$	487
Stock-based compensation expense		1,359		1,111		2,698		2,035
Amortization of intangible assets		682		717		1,399		1,434
Non-GAAP income	$	2,680	$	2,116	$	5,109	$	3,956
Shares used to compute non-GAAP income per share
Basic		16,210		15,076		16,183		14,983
Diluted		16,768		15,785		16,799		15,677
Non-GAAP income per share
Basic	$	0.17	$	0.14	$	0.32	$	0.26
Diluted	$	0.16	$	0.13	$	0.30	$	0.25

Liquidity and Capital Resources

At June 30, 2014, our principal sources of liquidity were cash and cash equivalents of $136.5 million and accounts receivable, net of allowance for doubtful accounts, of $13.3 million. Our working capital at June 30, 2014 was $145.5 million compared to $137.2 million at December 31, 2013. The increase in working capital from December 31, 2013 to June 30, 2014 resulted from the following:

• $5.2 million increase in cash and cash equivalents, due primarily to the $6.9 million of cash provided by operations and the $1.6 million of cash received from the exercise of stock options and proceeds from our employee stock purchase plan, reduced by the $3.4 million of cash used for capital expenditures;

• $1.7 million increase in net accounts receivable, as new accounts exceeded collections of outstanding balances for the six months ended June 30, 2014;

• $1.4 million increase in deferred costs, current, for expenses related to increased implementation resources and commission payments for new business;

• $496,000 increase in prepaid expenses and other current assets due primarily to prepaid service contracts;

• $1.2 million increase in accounts payable, primarily due to timing of payments;

• $342,000 decrease in accrued compensation and benefits, due primarily to payroll timing;

• $996,000 decrease in accrued expenses and other current liabilities due primarily to payments completed under a software licensing agreement; and

• $577,000 increase in deferred revenue, current, due to new business for the six months ended June 30, 2014.

16

Net Cash Flows from Operating Activities

Net cash provided by operating activities was $6.9 million for the six months ended June 30, 2014 compared to $8.6 million for the same period in 2013. The increase in net income, the changes in non-cash expenses, including increased depreciation and stock-based compensation, and the changes in our working capital accounts, including those discussed above, resulted in the overall decrease in net cash provided by operations.

Net Cash Flows from Investing Activities

Net cash used in investing activities was $3.4 million and $1.7 million for the six months ended June 30, 2014 and 2013, respectively, all for capital expenditures. Our capital expenditures are for supporting our business growth and existing customer base, as well as for our internal use such as equipment for our employees.

Net Cash Flows from Financing Activities

Net cash provided by financing activities was $1.7 million and $2.2 million for the six months ended June 30, 2014 and 2013, respectively, all related to the exercise of stock options and our employee stock purchase plan.

Credit Facility

We have a revolving credit agreement with JPMorgan Chase Bank, N.A. that will mature on September 30, 2016. The revolving credit agreement provides for a $20 million revolving credit facility that we may draw upon from time to time, subject to certain terms and conditions. There were no borrowings outstanding at June 30, 2014 and we were in compliance with all covenants under the revolving credit agreement as of that date.

Adequacy of Capital Resources

Our future capital requirements may vary significantly from those now planned and will depend on many factors, including the costs to develop and implement new solutions and applications, the sales and marketing resources needed to further penetrate our market and gain acceptance of new solutions and applications we develop, the expansion of our operations in the United States and internationally, the response of competitors to our solutions and applications and our use of capital for acquisitions, if any. Historically, we have experienced increases in our expenditures consistent with the growth in our operations and personnel, and we anticipate that our expenditures will continue to increase as we grow our business.

We believe our cash and cash equivalents and our cash flows from operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months.

Inflation and changing prices did not have a material effect on our business during the six months ended June 30, 2014. We do not expect that inflation or changing prices will materially affect our business in the foreseeable future.

Our results of operations and cash flows are not materially affected by fluctuations in foreign currency exchange rates.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.

17

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity Risk

For fixed rate debt, interest rate changes affect the fair value of financial instruments but do not impact earnings or cash flows. Conversely, for floating rate debt, interest rate changes generally do not affect the fair market value but do impact future earnings and cash flows, assuming other factors are held constant. The principal objectives of our investment activities are to preserve principal, provide liquidity and maximize income consistent with minimizing risk of material loss. The recorded carrying amounts of cash and cash equivalents approximate fair value due to their short maturities. We did not have any outstanding debt as of June 30, 2014. We therefore do not have any material risk to interest rate fluctuations unless we borrow under our credit facility in the future.

Foreign Currency Exchange Risk

Our results of operations and cash flows are not materially affected by fluctuations in foreign currency exchange rates.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2014.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

18

PART II. – OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any material legal proceedings. From time to time, we may be named as a defendant in legal actions or otherwise be subject to claims arising from our normal business activities. Any such actions, even those that lack merit, could result in the expenditure of significant financial and managerial resources. We believe that we have obtained adequate insurance coverage or rights to indemnification in connection with potential legal proceedings that may arise.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on February 20, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits

The exhibits filed as part of this Quarterly Report on Form 10-Q are listed in the Exhibit Index immediately following the signatures to this report.

19

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: July 31, 2014	SPS COMMERCE, INC.
	/s/ KIMBERLY K. NELSON
	Kimberly K. Nelson
	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)

20

EXHIBIT INDEX

Exhibit Number	Description
3.1	Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-3 (File No. 333-182097) filed with the Commission on June 13, 2012).
3.2	Bylaws (incorporated by reference to Exhibit 3.2 to our Registration Statement on Form S-1/A (File No. 333-163476) filed with the Commission on March 5, 2010).
31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith).
31.2	Certification of Principal Financial Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as amended (filed herewith).
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101	Interactive Data Files Pursuant to Rule 405 of Regulation S-T (filed herewith).

21

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Archie C. Black, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SPS Commerce, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ ARCHIE C. BLACK

Archie C. Black

President and Chief Executive Officer

(principal executive officer)

July 31, 2014

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Kimberly K. Nelson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SPS Commerce, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

/s/ KIMBERLY K. NELSON

Kimberly K. Nelson

Executive Vice President and Chief Financial Officer

(principal financial and accounting officer)

July 31, 2014

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of SPS Commerce, Inc. (the “Company”) for the period ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Executive Officer and the Chief Financial Officer of the Company, hereby certify, pursuant to and for purposes of 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ARCHIE C. BLACK

Archie C. Black

President and Chief Executive Officer

/s/ KIMBERLY K. NELSON

Kimberly K. Nelson

Executive Vice President and Chief Financial Officer

July 31, 2014

XML

Stock-Based Compensation

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

NOTE D – Stock-Based Compensation

Our equity compensation plans provide for the grant of incentive and nonqualified stock options, as well as other stock-based awards including restricted stock and restricted stock units, to employees, non-employee directors and other consultants who provide services to us. Restricted stock awards result in the issuance of new shares when granted. For other stock-based awards, new shares are issued when the award is exercised, vested or released according to the terms of the agreement. In January 2014, 965,527 additional shares were reserved for future issuance under our 2010 Equity Incentive Plan. At June 30, 2014, there were approximately 2.6 million shares available for grant under approved equity compensation plans.

We recorded non-cash stock-based compensation expense of $1.4 million and $2.7 million for the three and six months ended June 30, 2014, and $1.1 million and $2.0 million for the three and six months ended June 30, 2013, respectively. This expense was allocated as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of revenues	$	152	$	122	$	305	$	225
Operating expenses
Sales and marketing		472		386		954		728
Research and development		95		63		188		124
General and administrative		640		540		1,251		958
Total stock-based compensation expense	$	1,359	$	1,111	$	2,698	$	2,035

As of June 30, 2014, there was approximately $10.9 million of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a straight line basis over a weighted average period of 2.8 years.

Stock Options

Stock options generally vest over four years and have a contractual term of seven to ten years from the date of grant. Our stock option activity was as follows:

				Weighted Average
	Options			Exercise Price
	(#)			($/share)
Outstanding at December 31, 2013		1,097,223		$	19.62
Granted		143,753			63.48
Exercised		(93,744	)		9.77
Forfeited		(9,883	)		40.50
Outstanding at June 30, 2014		1,137,349			25.79

Of the total outstanding options at June 30, 2014, 717,306 were exercisable with a weighted average exercise price of $16.66 per share. The total outstanding options had a weighted average remaining contractual life of 5.7 years.

The weighted average fair value per share of options granted during the first six months of 2014 was $24.69 and this was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Weighted-average volatility	43.7	%
Expected dividend yield	0	%
Expected life (in years)	4.4
Risk-free interest rate	1.06-1.55	%

Restricted Stock Units and Awards

Restricted stock units vest over four years and, upon vesting, the holder is entitled to receive shares of our common stock. With restricted stock awards, shares of our common stock are issued when the award is granted and the restrictions lapse over one year.

Our restricted stock units activity was as follows:

	Restricted Stock			Weighted Average
	Units			Grant Date Fair
	(#)			Value ($/share)
Outstanding at December 31, 2013		102,644		$	33.77
Granted		38,420			65.88
Vested and common stock issued		(26,557	)		32.27
Forfeited		(1,145	)		35.42
Outstanding at June 30, 2014		113,362			44.99

The number of restricted stock units outstanding at June 30, 2014 included 12,063 units that have vested but for which shares of common stock have not yet been issued pursuant to the terms of the agreement.

Our restricted stock awards activity was as follows:

	Restricted Stock			Weighted Average
	Awards			Grant Date Fair
	(#)			Value ($/share)
Outstanding at December 31, 2013		1,422		$	48.66
Restricted common stock issued		5,352			51.74
Restrictions lapsed		(2,523	)		50.29
Forfeited		(237	)		48.66
Outstanding at June 30, 2014		4,014			51.74

Employee Stock Purchase Plan

Our employee stock purchase plan allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The plan is available to all employees subject to certain eligibility requirements. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price that is the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period. The plan consists of two six-month offering periods, beginning on January 1 and July 1 of each calendar year. A total of 1.2 million shares of common stock are reserved for issuance under the plan.

For the offering period that began on January 1, 2014 and ended June 30, 2014, we withheld approximately $680,000 from employees participating in the plan. On June 30, 2014, approximately $672,000 of these funds was used to purchase 12,520 shares on behalf of the employees participating in the plan. The remaining funds are expected to be refunded to employees pursuant to the requirements of the plan.

For the three and six months ended June 30, 2014, we recorded approximately $95,000 and $201,000, respectively, of stock-based compensation expense associated with the employee stock purchase plan. The fair value was estimated based on the market price of our common stock at the beginning of each offering period and using the Black-Scholes option pricing model with the following assumptions:

Expected volatility	48.9	%
Expected dividend yield	0	%
Expected life (in years)	0.50
Risk-free interest rate	0.10	%

XML

Net Income Per Share - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Outstanding potential common shares excluded from computation of net income per share	126,000	16,000	126,000	16,000

XML

Net Income Per Share - Components of Computation of Basic and Diluted Net Income Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Numerator
Net income	$ 639	$ 288	$ 1,012	$ 487
Denominator
Weighted average common shares outstanding, basic	16,210	15,076	16,183	14,983
Options to purchase common stock	528	665	572	646
Restricted stock units	30	39	43	45
Employee stock purchase plan	0	5	1	3
Weighted average common shares outstanding, diluted	16,768	15,785	16,799	15,677
Net income per share
Basic	$ 0.04	$ 0.02	$ 0.06	$ 0.03
Diluted	$ 0.04	$ 0.02	$ 0.06	$ 0.03

XML

Line of Credit

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Line of Credit

NOTE C – Line of Credit

We have a revolving credit agreement with JPMorgan Chase Bank, N.A. which provides for a $20 million revolving credit facility that we may draw upon from time to time, subject to certain terms and conditions, and will mature on September 30, 2016.

There were no borrowings outstanding at June 30, 2014 and we were in compliance with all covenants under the revolving credit agreement as of that date.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash and cash equivalents	$ 136,508	$ 131,294
Accounts receivable, less allowance for doubtful accounts of $242 and $237, respectively	13,348	11,611
Deferred costs, current	10,415	9,048
Deferred income taxes, current	1,272	1,272
Prepaid expenses and other current assets	3,346	2,850
Total current assets	164,889	156,075
PROPERTY AND EQUIPMENT, net	9,036	9,922
GOODWILL	25,487	25,487
INTANGIBLE ASSETS, net	15,683	17,082
OTHER ASSETS
Deferred costs, net of current portion	4,578	3,684
Deferred income taxes, net of current portion	10,294	10,870
Other non-current assets	205	210
Total assets	230,172	223,330
CURRENT LIABILITIES
Accounts payable	2,999	1,798
Accrued compensation and benefits	7,639	7,981
Accrued expenses and other current liabilities	1,805	2,801
Deferred revenue, current	6,912	6,335
Total current liabilities	19,355	18,915
OTHER LIABILITIES
Deferred revenue, less current portion	10,017	8,785
Deferred rent	2,663	2,857
Total liabilities	32,035	30,557
COMMITMENTS and CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding	0	0
Common stock, $0.001 par value; 55,000,000 shares authorized; 16,230,057 and 16,092,121 shares issued and outstanding, respectively	16	16
Additional paid-in capital	243,901	239,549
Accumulated deficit	(45,780)	(46,792)
Total stockholders' equity	198,137	192,773
Total liabilities and stockholder's equity	$ 230,172	$ 223,330

XML

General

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

General

NOTE A – General

Business Description

We are a leading provider of cloud-based supply chain management solutions, providing prewired, proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. We provide our solutions through the SPS Commerce platform, a cloud-based software suite that improves the way suppliers, retailers, distributors and other customers manage and fulfill orders. We derive the majority of our revenues from thousands of monthly recurring subscriptions from businesses that utilize our solutions.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of SPS Commerce, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP. We have included all normal recurring adjustments considered necessary to give a fair statement of our financial position, results of operations and cash flows for the interim periods shown. Operating results for these interim periods are not necessarily indicative of the results to be expected for the full year. The December 31, 2013 condensed consolidated balance sheet data was derived from our audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying notes for the year ended December 31, 2013 included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 20, 2014.

Use of Estimates

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Significant Accounting Policies

During the six months ended June 30, 2014, there were no material changes in our significant accounting policies. See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 20, 2014, for additional information regarding our significant accounting policies.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued new accounting requirements for the recognition of revenue from contracts with customers. These new requirements are effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the impact of this guidance on our results of operations and financial position.

XML

Stock-Based Compensation - Stock Option Activity (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Options Outstanding, Beginning balance	1,097,223
Options, Granted	143,753
Options, Exercised	(93,744)
Options, Forfeited	(9,883)
Options Outstanding, Ending balance	1,137,349
Weighted Average Exercise Price, Outstanding, Beginning Balance	$ 19.62
Weighted Average Exercise Price, Granted	$ 63.48
Weighted Average Exercise Price, Exercised	$ 9.77
Weighted Average Exercise Price, Forfeited	$ 40.50
Weighted Average Exercise Price, Outstanding, Ending Balance	$ 25.79

XML

Stock-Based Compensation - Restricted Stock Units (Detail) (Restricted Stock Units [Member], USD $)	6 Months Ended
	Jun. 30, 2014
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards, Outstanding, Beginning Balance	102,644
Granted, stock units	38,420
Vested, stock units	(26,557)
Forfeited, stock units	(1,145)
Stock awards, Outstanding, Ending Balance	113,362
Weighted average grant date fair value, Outstanding, Beginning Balance	$ 33.77
Granted, Weighted Average Grant Date Fair Value	$ 65.88
Vested, Weighted Average Grant Date Fair Value	$ 32.27
Forfeited, Weighted Average Grant Date Fair Value	$ 35.42
Weighted average grant date fair value, Outstanding, Ending Balance	$ 44.99

XML

Goodwill and Intangible Assets, net

6 Months Ended

Jun. 30, 2014

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, net

NOTE B – Goodwill and Intangible Assets, net

There was no change in our goodwill for the six months ended June 30, 2014.

Intangible assets included the following (in thousands):

	June 30, 2014							December 31, 2013
	Carrying		Accumulated					Carrying		Accumulated
	Amount		Amortization			Net		Amount		Amortization			Net
Subscriber relationships	$	23,160	$	(7,638	)	$	15,522	$	23,160	$	(6,376	)	$	16,784
Non-competition agreements		1,710		(1,549	)		161		1,710		(1,412	)		298
	$	24,870	$	(9,187	)	$	15,683	$	24,870	$	(7,788	)	$	17,082

Amortization expense for intangible assets was $682,000 and $1.4 million for the three and six months ended June 30, 2014, and $717,000 and $1.4 million for the three and six months ended June 30, 2013, respectively.

At June 30, 2014, future amortization expense for intangible assets was as follows (in thousands):

Remainder of 2014	$	1,288
2015		2,578
2016		2,578
2017		2,557
2018		2,062
Thereafter		4,620
	$	15,683

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 242	$ 237
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	55,000,000	55,000,000
Common stock, shares issued	16,230,057	16,092,121
Common stock, shares outstanding	16,230,057	16,092,121

XML

Goodwill and Intangible Assets, Net - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 682	$ 717	$ 1,399	$ 1,434

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 24, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	SPSC
Entity Registrant Name	SPS COMMERCE INC
Entity Central Index Key	0001092699
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		16,234,758

XML

Goodwill and Intangible Assets, Net - Future Amortization Expense for Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2014	$ 1,288
2015	2,578
2016	2,578
2017	2,557
2018	2,062
Thereafter	4,620
Net	$ 15,683	$ 17,082

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Statement [Abstract]
Revenues	$ 31,100	$ 25,658	$ 60,039	$ 49,410
Cost of revenues	9,627	7,943	18,882	15,009
Gross profit	21,473	17,715	41,157	34,401
Operating expenses
Sales and marketing	11,570	9,647	22,454	18,872
Research and development	3,365	2,657	6,339	5,160
General and administrative	4,842	4,211	9,353	8,258
Amortization of intangible assets	682	717	1,399	1,434
Total operating expenses	20,459	17,232	39,545	33,724
Income from operations	1,014	483	1,612	677
Other income (expense)
Interest income	50	22	99	45
Other income (expense), net	35	(48)	(21)	(132)
Total other income (expense), net	85	(26)	78	(87)
Income before income taxes	1,099	457	1,690	590
Income tax expense	(460)	(169)	(678)	(103)
Net income	$ 639	$ 288	$ 1,012	$ 487
Net income per share
Basic	$ 0.04	$ 0.02	$ 0.06	$ 0.03
Diluted	$ 0.04	$ 0.02	$ 0.06	$ 0.03
Weighted average common shares used to compute net income per share
Basic	16,210	15,076	16,183	14,983
Diluted	16,768	15,785	16,799	15,677

XML

General (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Business Description

Business Description

We are a leading provider of cloud-based supply chain management solutions, providing prewired, proven integrations and comprehensive retail performance analytics to thousands of customers worldwide. We provide our solutions through the SPS Commerce platform, a cloud-based software suite that improves the way suppliers, retailers, distributors and other customers manage and fulfill orders. We derive the majority of our revenues from thousands of monthly recurring subscriptions from businesses that utilize our solutions.

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of SPS Commerce, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and notes required by GAAP. We have included all normal recurring adjustments considered necessary to give a fair statement of our financial position, results of operations and cash flows for the interim periods shown. Operating results for these interim periods are not necessarily indicative of the results to be expected for the full year. The December 31, 2013 condensed consolidated balance sheet data was derived from our audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying notes for the year ended December 31, 2013 included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on February 20, 2014.

Use of Estimates

Use of Estimates

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Significant Accounting Policies

Significant Accounting Policies

During the six months ended June 30, 2014, there were no material changes in our significant accounting policies. See Note A to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 20, 2014, for additional information regarding our significant accounting policies.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued new accounting requirements for the recognition of revenue from contracts with customers. These new requirements are effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the impact of this guidance on our results of operations and financial position.

XML

Net Income Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Net Income Per Share

NOTE F – Net Income Per Share

Basic net income per share has been computed using the weighted average number of shares of common stock outstanding during each period. Diluted net income per share also includes the impact of our outstanding potential common shares, including options and restricted stock units. Potential common shares that are anti-dilutive are excluded from the calculation of diluted net income per share.

The following table presents the components of the computation of basic and diluted net income per share for the periods indicated (in thousands, except per share amounts):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Numerator
Net income	$	639	$	288	$	1,012	$	487
Denominator
Weighted average common shares outstanding, basic		16,210		15,076		16,183		14,983
Options to purchase common stock		528		665		572		646
Restricted stock units		30		39		43		45
Employee stock purchase plan		—		5		1		3
Weighted average common shares outstanding, diluted		16,768		15,785		16,799		15,677
Net income per share
Basic	$	0.04	$	0.02	$	0.06	$	0.03
Diluted	$	0.04	$	0.02	$	0.06	$	0.03

The effect of approximately 126,000 and 16,000 outstanding potential common shares was excluded from the calculation of diluted net income per share for each of the three and six months ended June 30, 2014 and 2013, respectively, because they were anti-dilutive.

XML

Stock-Based Compensation - Weighted Average Fair Value Per Share of Options Granted, Assumptions (Detail) (Stock Options [Member])	6 Months Ended
	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average volatility	43.70%
Expected dividend yield	0.00%
Expected life (in years)	4 years 4 months 24 days
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.06%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.55%

XML

Line of Credit - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014
Line of Credit Facility [Line Items]
Revolving credit facility, amount	$ 20,000,000
Revolving credit facility, maturity date	Sep. 30, 2016
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Borrowings outstanding revolving credit agreement	$ 0

XML

Net Income Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Components of Computation of Basic and Diluted Net Income Per Share

The following table presents the components of the computation of basic and diluted net income per share for the periods indicated (in thousands, except per share amounts):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Numerator
Net income	$	639	$	288	$	1,012	$	487
Denominator
Weighted average common shares outstanding, basic		16,210		15,076		16,183		14,983
Options to purchase common stock		528		665		572		646
Restricted stock units		30		39		43		45
Employee stock purchase plan		—		5		1		3
Weighted average common shares outstanding, diluted		16,768		15,785		16,799		15,677
Net income per share
Basic	$	0.04	$	0.02	$	0.06	$	0.03
Diluted	$	0.04	$	0.02	$	0.06	$	0.03

XML

Goodwill and Intangible Assets, net (Tables)

6 Months Ended

Jun. 30, 2014

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets included the following (in thousands):

	June 30, 2014							December 31, 2013
	Carrying		Accumulated					Carrying		Accumulated
	Amount		Amortization			Net		Amount		Amortization			Net
Subscriber relationships	$	23,160	$	(7,638	)	$	15,522	$	23,160	$	(6,376	)	$	16,784
Non-competition agreements		1,710		(1,549	)		161		1,710		(1,412	)		298
	$	24,870	$	(9,187	)	$	15,683	$	24,870	$	(7,788	)	$	17,082

Future Amortization Expense for Intangible Assets

At June 30, 2014, future amortization expense for intangible assets was as follows (in thousands):

Remainder of 2014	$	1,288
2015		2,578
2016		2,578
2017		2,557
2018		2,062
Thereafter		4,620
	$	15,683

XML

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Stock-Based Compensation Expense

This expense was allocated as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Cost of revenues	$	152	$	122	$	305	$	225
Operating expenses
Sales and marketing		472		386		954		728
Research and development		95		63		188		124
General and administrative		640		540		1,251		958
Total stock-based compensation expense	$	1,359	$	1,111	$	2,698	$	2,035

Stock Option Activity

Our stock option activity was as follows:

				Weighted Average
	Options			Exercise Price
	(#)			($/share)
Outstanding at December 31, 2013		1,097,223		$	19.62
Granted		143,753			63.48
Exercised		(93,744	)		9.77
Forfeited		(9,883	)		40.50
Outstanding at June 30, 2014		1,137,349			25.79

Weighted Average Fair Value Per Share of Options Granted, Assumptions

The weighted average fair value per share of options granted during the first six months of 2014 was $24.69 and this was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Weighted-average volatility	43.7	%
Expected dividend yield	0	%
Expected life (in years)	4.4
Risk-free interest rate	1.06-1.55	%

Weighted Average Fair Value Per Share, Employee Stock Purchase Plan, Assumptions

The fair value was estimated based on the market price of our common stock at the beginning of each offering period and using the Black-Scholes option pricing model with the following assumptions:

Expected volatility	48.9	%
Expected dividend yield	0	%
Expected life (in years)	0.50
Risk-free interest rate	0.10	%

Restricted Stock Units [Member]

Restricted Stock Units and Restricted Stock Awards

Our restricted stock units activity was as follows:

	Restricted Stock			Weighted Average
	Units			Grant Date Fair
	(#)			Value ($/share)
Outstanding at December 31, 2013		102,644		$	33.77
Granted		38,420			65.88
Vested and common stock issued		(26,557	)		32.27
Forfeited		(1,145	)		35.42
Outstanding at June 30, 2014		113,362			44.99

Restricted Stock Award [Member]

Restricted Stock Units and Restricted Stock Awards

Our restricted stock awards activity was as follows:

	Restricted Stock			Weighted Average
	Awards			Grant Date Fair
	(#)			Value ($/share)
Outstanding at December 31, 2013		1,422		$	48.66
Restricted common stock issued		5,352			51.74
Restrictions lapsed		(2,523	)		50.29
Forfeited		(237	)		48.66
Outstanding at June 30, 2014		4,014			51.74

XML

Goodwill and Intangible Assets, Net - Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Carrying Amount	$ 24,870	$ 24,870
Accumulated Amortization	(9,187)	(7,788)
Net	15,683	17,082
Subscriber relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Carrying Amount	23,160	23,160
Accumulated Amortization	(7,638)	(6,376)
Net	15,522	16,784
Non-competition agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Carrying Amount	1,710	1,710
Accumulated Amortization	(1,549)	(1,412)
Net	$ 161	$ 298

XML

Stock-Based Compensation - Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 1,359	$ 1,111	$ 2,698	$ 2,035
Cost of revenues [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	152	122	305	225
Sales and marketing [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	472	386	954	728
Research and development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	95	63	188	124
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 640	$ 540	$ 1,251	$ 958

XML

Stock-Based Compensation - Fair Value Estimation of Common Stock Using Black-Scholes Option Pricing Model, Assumptions (Detail) (Employee Stock Purchase Plan [Member])	6 Months Ended
	Jun. 30, 2014
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	48.90%
Expected dividend yield	0.00%
Expected life (in years)	6 months
Risk-free interest rate	0.10%

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities
Net income	$ 1,012	$ 487
Reconciliation of net income to net cash provided by operating activities
Deferred income taxes	576	31
Depreciation and amortization of property and equipment	2,823	2,353
Amortization of intangible assets	1,399	1,434
Provision for doubtful accounts	323	185
Stock-based compensation	2,698	2,035
Changes in assets and liabilities
Accounts receivable	(2,060)	(951)
Deferred costs	(2,260)	(1,265)
Prepaid expenses and other current assets	(491)	2,512
Accounts payable	1,202	(207)
Accrued compensation and benefits	(342)	473
Accrued expenses and other current liabilities	421	497
Deferred rent	(170)
Deferred revenue	1,809	1,049
Net cash provided by operating activities	6,940	8,633
Cash flows from investing activities
Purchases of property and equipment	(3,380)	(1,737)
Net cash used in investing activities	(3,380)	(1,737)
Cash flows from financing activities
Net proceeds from exercise of options to purchase common stock	922	1,597
Excess tax benefit from exercise of options to purchase common stock	60	40
Net proceeds from employee stock purchase plan	672	551
Net cash provided by financing activities	1,654	2,188
Net increase in cash and cash equivalents	5,214	9,084
Cash and cash equivalents at beginning of period	131,294	66,050
Cash and cash equivalents at end of period	$ 136,508	$ 75,134

XML

Income Taxes

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

NOTE E – Income Taxes

We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pretax income and adjust the provision for discrete tax items recorded in the period. Differences between our effective tax rate and statutory tax rates are primarily due to the impact of meals and entertainment expense, employee stock purchase plan expense, as well as the federal R&D credit.

We recorded income tax expense of $460,000 and $678,000 for the three and six months ended June 30, 2014. We recorded income tax expense of $169,000 and $103,000 for the three and six months ended June 30, 2013. Our provisions for income taxes included current foreign and state income tax expense, as well as deferred tax expense.

We are subject to U.S federal income tax as well as income tax in various state and international jurisdictions. We are generally subject to tax examinations for all prior years due to our net operating loss carryforwards. As of June 30, 2014, we were not under any income tax audits by tax authorities.

As of June 30, 2014 we do not have any unrecognized tax benefits. It is our practice to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not expect any material changes in our unrecognized tax positions over the next 12 months.

XML

Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Tax Disclosure [Abstract]
Income tax expense	$ (460,000)	$ (169,000)	$ (678,000)	$ (103,000)
Unrecognized tax benefits	0		0
Significant change in unrecognized tax benefits is reasonably possible, amount of unrecorded benefit	$ 0		$ 0

XML

Stock-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		1 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 OfferingPeriods	Jun. 30, 2013	Jan. 31, 2014 Equity Incentive Plan 2010 [Member]	Jun. 30, 2014 Employee Stock Purchase Plan [Member]	Jun. 30, 2014 Employee Stock Purchase Plan [Member]	Jun. 30, 2014 Restricted Stock Units [Member]	Jun. 30, 2014 Restricted Stock Award [Member]	Jun. 30, 2014 Maximum [Member]	Jun. 30, 2014 Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional shares were authorized under 2010 Equity Incentive Plan					965,527
Shares available for grant	2,600,000		2,600,000
Stock-based compensation expense	$ 1,359,000	$ 1,111,000	$ 2,698,000	$ 2,035,000		$ 95,000	$ 201,000
Unrecognized stock-based compensation expense	10,900,000		10,900,000
Unrecognized stock-based compensation, expected to be recognized, weighted average period			2 years 9 months 18 days
Stock options contractual term Range										10 years	7 years
Stock options vest, period			4 years					4 years
Stock options contractual term, from the date of grant			Seven to ten years
Stock options exercisable	717,306		717,306
Weighted average exercise price	$ 16.66		$ 16.66
Weighted average remaining contractual life			5 years 8 months 12 days
Weighted average fair value per share of options granted			$ 24.69
Restricted stock awards units vest over, period									1 year
Number of RSU's vested and not issued during the period			12,063
Percentage of common stock on fair market value			85.00%
Number of offerings per year			2
Common stock reserved for future issuance						1,200,000	1,200,000
Employee stock purchase plan, employees contribution	680,000		680,000
Employee stock purchase plan, shares purchased			12,520
Net proceeds from employee stock purchase plan			$ 672,000	$ 551,000