SPS Commerce, Inc. (SPSC) Cash Flow Statement

The consistent gap in favor of operating cash flow suggests reported earnings are conservative relative to cash generation, largely due to non-cash add-backs such as stock-based compensation of $10.4M to $18.7M per quarter and D&A of roughly $11M to $16M. The extreme ratio in 2026Q2 is driven by a depressed net income figure rather than unusually strong cash, so it should not be read as a durable quality signal. Investors should monitor whether the SBC add-back continues to bridge the gap, since reliance on non-cash compensation to support cash conversion warrants scrutiny over time.

The recent FCF margin level sits well above the 2024 to mid-2025 range, which suggests improved cash monetization of the revenue base. However, the swing from 13.7% to 29.6% within a year points to timing effects in working capital and collections rather than a steady structural shift. Investors should weight trailing averages over single quarters when judging the durability of this margin.

Repurchases closely track free cash flow in recent quarters, which suggests management is prioritizing share count reduction over balance sheet accumulation or M&A. Acquisition outflows were concentrated in 2024 and 2025, including a $141.6M net outflow in 2025Q1, and appear to have paused recently. Investors should assess whether sustained buybacks at this pace are offsetting dilution from stock-based compensation or are leaving limited cash reserves for future flexibility.