SPS Commerce Buys Texas Tech Company CovalentWorks For $23m

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Via News Release

“MINNEAPOLIS, Dec. 19, 2018 (GLOBE NEWSWIRE) — SPS Commerce, Inc. (SPSC), a leader in retail cloud services, today announced the acquisition of CovalentWorks, a provider of cloud-based EDI solutions to approximately 2,000 small and medium-sized businesses.”

“We are pleased to welcome CovalentWorks’ employees and customers to the SPS Commerce community,” said Archie Black, President and CEO of SPS Commerce. “With the addition of CovalentWorks’ customers, this acquisition further extends the power of our retail community.”

“SPS Commerce shares our vision of helping trading partners work better together through people, process and innovative technology solutions,” said Steve Brewer, CEO of CovalentWorks. “We are excited to empower our customers with the opportunities that SPS Commerce and its network can offer.”

As part of the SPS Commerce community, CovalentWorks customers will have access to the industry’s broadest retail trading network, leading ERP, e-commerce and logistics applications, global supply chain partners, and opportunities to enhance supply chain efficiency.

Acquisition Details

Under the terms of the acquisition agreement, SPS Commerce acquired substantially all of the assets of CovalentWorks for approximately $20 million in cash and $3 million in stock. CovalentWorks is headquartered in Houston, TX.

SPS Commerce anticipates the acquisition will have a nominal impact to fourth quarter and full year 2018 expected financial results.

For fiscal year 2019, the company expects the acquisition will add approximately $4.5 million in revenue and approximately $1 million in Adjusted EBITDA. The company anticipates the acquisition to contribute approximately $100,000 per quarter to Adjusted EBITDA in the first half of 2019, and approximately $400,000 per quarter in the second half of 2019. The company also expects the acquisition to contribute approximately $2 million to Adjusted EBITDA in fiscal year 2020. Additional details, including the amortization expense associated with the acquisition, will be provided when the company reports fourth quarter and fiscal 2018 results in February of 2019.

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