Prepared remarks
Good day, and welcome to the SPS Commerce second-quarter 2026 earnings conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Irmina Blaszczyk, Investor Relations for SPS Commerce. Please go ahead.
Good afternoon, everyone. Thank you for joining us on SPS Commerce's second-quarter 2026 conference call. We will make certain statements today, including with respect to our expected financial results, go-to-market strategy and efforts designed to increase our traction and penetration with retailers and other customers. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of the call, and we undertake no obligation to publicly update and revise any forward-looking statements whether as a result of new information, future events, or otherwise. Please refer to our SEC filings, specifically our Form 10-K, as well as our financial results press release for a more detailed description of the risk factors that may affect our results. These documents are available at our website, spscommerce.com, and at the SEC's website, sec.gov. In addition, we are providing a historical data sheet for easy reference on the Investor Relations section of our website, spscommerce.com. During our call today, we will discuss adjusted EBITDA financial measures and non-GAAP income per share. In our press release and our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding these non-GAAP financial measures, including reconciliations of these measures with comparable GAAP measures. With that, I will turn the call over to Chad.
Thanks, Irmina, and good afternoon, everyone. Thank you for joining us today. At SPS Commerce, our foundation has always been our cloud-based supply chain network. Today, our network stands as a massive, interconnected retail ecosystem of tens of thousands of suppliers and 3,500 buying organizations, including all the major retailers and distributors in North America. We work with more than 2,000 logistics providers and over 400 technology partners, which enables us to integrate our network with all of our customers' supply chain and business systems. We are protocol agnostic and enable fulfillment models and channels with grade-A security certifications. That foundation makes everything that follows possible and represents our AI use case on our network. The SPS Commerce network took over 25 years to get to where it is today. Through its network and scale, we are building partnerships, supporting evolving supply chains, and helping our customers grow. Having recently divested the 3P revenue recovery business, we have sharpened our focus on strategic relationships with 1P suppliers who operate multi-retailer trading relationships and benefit from our intelligent supply chain and portfolio solutions. As the network expands, we continue to capture proprietary intelligence from trading partner activity: transaction patterns, digital specifications, and compliance rules, strengthening the supply chain rules engine that powers MAX, SPS's AI agent. By leveraging SPS's network intelligence within everyday workflows, Max enables customers to interact with their supply chains in a more intuitive, proactive, and connected way. Users can instantly compare business requirements and business performance between major retailers like Target and Costco. With proactive monitoring, Max serves as a 24/7 extension of a customer's team, detecting anomalies and flagging critical business errors. Max puts the expertise of the SPS network at the customer's fingertips to instantly diagnose business issues and determine actionable solutions, shortening the time it takes to address risks in trading partner relationships. For example, Branch Furniture is a fast-growing wholesale brand selling to major retailers like Williams-Sonoma, Lumens, and Office Depot. They rely on SPS Commerce to manage order flows across multiple channels and have already experienced significant efficiencies using MAX to resolve order issues in minutes as opposed to days. For one of their key retail partners, Max helped achieve 90% weekly time savings in managing overdue orders. Other customers have recognized tangible results since MAX's beta-phase launch. Max successfully caught a $290,000 invoice failure due to an incorrect UPC code. It identified 100 stalled dropship orders for an outdoor brand. It flagged $70,000 in unacknowledged purchase orders for a food manufacturer. Delivering this immediate ROI, MAX is quickly becoming the default starting point for customers inside the SPS user interface. They trust Max's proprietary supply chain expertise, and they are increasingly allowing it to take automated actions on their behalf, continually improving operational efficiencies with their trading partners. By pairing SPS' network intelligence with our agentic capabilities, we completed our first AI-powered customer onboarding, including pre-sale contacts and account provisioning. We are working toward a future where agentic technology can engage a new customer immediately after a deal closes, with more of the onboarding processes shifting to AI as we continue to reduce the time it takes for customers to transact with their trading partners. Agent-assisted customer functions and onboarding, as well as the agentification of our internal operations, are the two pillars in our agent strategy already in motion at SPS. We are also exploring new AI-powered use cases and products, which we believe will drive ARPU expansion and increase the size of our addressable market. The initial launch of Max to all SPS Fulfillment customers is expected by the end of the summer, and we plan to launch additional products at scale later this year. One of the key learnings from our beta program is that users of Max through the chat interface are more likely to explore advanced Max features, and we expect this usage trend will define the path to monetization of our AI solutions. We are excited about these AI capabilities and the immense value they will bring to our network. And so are our customers. In a recent study of SPS customers, we quantified and validated the value and impact SPS delivers to their business. Eighty-three percent of customers said that the data in the SPS network improved their AI readiness. Eighty-seven percent cited improved scalability. And 100% of the surveyed customers said that without the SPS network, they would need more headcount, more tools, and more time, or in some cases, simply could not operate at the scale they do today. They see SPS as a strategic partner in navigating increasing supply chain complexity while they expand their business and trading network. Chosen Foods, a premier food and beverage company best known as America's No. 1 avocado oil brand, needed a supply chain that could keep pace with growth across their U.S. and Canadian operations. Over their decade-long relationship with SPS Commerce, they have scaled from one trading partner to dozens of customers, multiple 3PLs, and a growing supplier network. To prepare for their next phase of growth, Chosen Foods migrated to a new ERP and trusted SPS to manage the transition. Through a fully integrated Acumatica deployment, SPS Commerce delivered a unified approach across their order-to-cash, procure-to-pay, and revenue recovery workflows ahead of schedule and with zero operational downtime. Crucially, with growing deduction complexities across major retailers like Walmart, Amazon, and Target, SPS's automated dispute management successfully recovered approximately 30% of outstanding deductions, which represents hundreds of thousands of dollars while helping Chosen Foods identify why these deductions occurred and how to prevent them. Other customers realizing real ROI from SPS Revenue Recovery include Owlet, a leader in infant health technology, which recovered $1.4 million within six months of using the solution, including 100% recovery on a recent settlement totaling $423,000. Serta Simmons Bedding, one of North America's largest bedding manufacturers, recovered $200,000 by successfully challenging a post audit with a large retailer. Turning to our analytics business: SPS's new analytics solution is now running on an enhanced platform that delivers significant gains in both power and scale. This platform brings an improved user experience while enabling faster time to insight so customers can move seamlessly from data to decisions. It expands what is possible for customers, supporting growing data volumes, broader use cases, and future AI-predictive capabilities. With these platform enhancements, our analytics solution helps customers protect revenue, margin, and shelf space by catching risks early while uncovering new growth opportunities across products, customers, markets, and distribution. It also gives teams the agility and efficiency to act sooner, align inventory, forecasting, and planning while strengthening retailer relationships with a single view of performance. RuffleButts, a children's clothing company based in Texas, is leveraging the platform to gain significantly better sell-through visibility into one of the nation's largest retailers, capturing critical insights from data across more than 400 retail locations and the retailer's e-commerce channel. To sustain this momentum, automated data feeds and scheduled reporting will drive ongoing day-to-day analysis. Early feedback from RuffleButts on the platform's granular product and location insights has been highly positive, prompting this supplier to consider adding another major retailer to their reporting. In summary, SPS' customer success stories demonstrate that navigating today's increasingly complex supply chain requires an intelligent network. As businesses continue to expand across technology platforms and connect with new trading partners, they view SPS Commerce as a vital partner for scaling their operations and improving AI readiness. No other company can match the unique combination of AI capabilities, 25 years of proprietary data, deep domain expertise, and expansive network access to drive this kind of tangible value and collaboration that SPS offers today. With that, I will turn it over to Joe to discuss our financials.
Thank you, Chad, and welcome, everyone. We reported a strong second quarter of 2026. SPS Commerce's core business, excluding the divested 3P revenue recovery business, grew in the high single digits, driven by the acceleration of 1P customer ARPU growth resulting from continued upsell and cross-sell momentum. On June 30, we announced the sale of the 3P revenue recovery business. We believe this divestiture sharpens our focus on the strategic opportunity with 1P suppliers, who operate multi-retailer trading relationships and are positioned to benefit from our intelligent supply chain network and purchase additional solutions like fulfillment, revenue recovery, and analytics. SPS Commerce received a cash payment of $9.5 million at closing, and we incurred a loss on sale of $23.5 million in Q2 2026 in connection with the transaction. Now let's review our Q2 results. Revenue was $198 million, a 6% increase over Q2 of last year. Recurring revenue grew 6% year-over-year. As a result of the sale of the 3P revenue recovery business, and its approximately 7,300 customers, the total number of recurring revenue customers in Q2 was approximately 46,600 and average revenue per customer was $15,100. In Q2, ARPU skewed higher due to the divestiture's impact on our ARPU calculation. Our calculation uses an average of beginning and end-of-quarter customer counts. Because the quarter-end divestiture significantly reduced our final customer count, Q2 ARPU reflects full period revenue divided by a lower customer base. Adjusted EBITDA increased to $66.6 million, highlighting the health of our business as we scale. This was driven by strong operational execution, the realization of past investments, and benefits of improving process efficiencies. Turning to liquidity and cash flow, we ended the quarter with total cash and cash equivalents of $173 million. Free cash flow for the quarter was $57.4 million, bringing our trailing 12-month free cash flow to $198.7 million, up 40% year-over-year. In Q2 2026, we deployed nearly 90% of free cash flow to repurchase $51.2 million of SPS shares. Now turning to guidance. As a reminder, as a result of the divestiture of the 3P revenue recovery business on June 30, 2026, guidance factors in a reduction of approximately $10.5 million to revenue in the second half of 2026. The divestiture is expected to be neutral to adjusted EBITDA in the second half of 2026. For the third quarter of 2026, we expect revenue to be in the range of $196.3 million to $198.3 million. We expect adjusted EBITDA to be in the range of $67.4 million to $69.4 million. We expect fully diluted earnings per share to be in the range of $0.72 to $0.76 with fully diluted weighted-average shares outstanding of approximately 36.8 million. We expect non-GAAP diluted income per share to be in the range of $1.20 to $1.23, with stock-based compensation expense of approximately $16.4 million, depreciation expense of approximately $5.4 million, and amortization expense of approximately $8.5 million. For the full year 2026, we expect revenue to be in the range of $788 million to $793.4 million, representing approximately 5% growth over 2025 at the midpoint of the guided range. Excluding the impact of the divested business, we expect our core business revenue to grow high single digits. We expect adjusted EBITDA to be in the range of $265 million to $269.1 million, reflecting adjusted EBITDA margin of 34% at the midpoint, an increase of approximately 300 basis points compared to full-year 2025. We expect fully diluted earnings per share to be in the range of $2.24 to $2.33 with fully diluted weighted-average shares outstanding of approximately 36.9 million shares. We expect non-GAAP diluted income per share to be in the range of $4.84 to $4.93, with stock-based compensation expense of approximately $69.8 million, depreciation expense of approximately $23.4 million, and amortization expense for the year of approximately $35.6 million. For the remainder of the year, on a quarterly basis, investors should model approximately a 30% effective tax rate calculated on GAAP pre-tax net earnings. In summary, SPS' strong second quarter performance reflects the strength of our core business driven by upsell and cross-sell momentum. We continue to demonstrate operational rigor, exceeding our margin expansion goals while simultaneously rolling out our AI strategy across our network. With that, I would like to open the call to questions.
Questions and answers
Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press *2. First question today will come from Scott Berg with Needham. Please go ahead.
Hi, Chad. Hi, Joe. Nice quarter here. Got a couple of questions. Chad, first of all, I want to talk about the divestiture of the third-party revenue recovery business. You have been pretty positive on the long-term outlook for revenue recovery in general, and I know that part has been a little bit of a thorn in your side, but why divest it? Why divest it now? Help us understand the thought process to move on from that side. Got it. Helpful. And then Joe, I think we understand the number of customers that are leaving the platform with the divestiture. ARPU seems to be moving around. Are you calculating it any differently than the company has before? I only ask because you took a bunch of revenue in the quarter but obviously had lower customer accounts exiting the quarter. And then secondly, in conjunction with that, how do we think about the impact going into Q3 because of the revenue step down? Awesome. If I may, a quick third question: can you quantify what the third-party revenue recovery revenues were in the second half of 2025? I know you said the business is going to grow high single digits here the rest of the year excluding that, but any further modification of that number would be helpful. Thank you.
Scott, overall, we remain very confident in revenue recovery. We are seeing cross-selling to our fulfillment customers perform well and also seeing new business come in as this is an emerging category of SaaS solutions. The stronger opportunity was on the 1P supplier side — those selling primarily wholesale to multiple retailers, including Amazon. The 1P suppliers can use our whole portfolio of revenue solutions across multiple retailers, whereas the 3P business was concentrated among Amazon sellers and did not have a lot of overlap with the rest of our portfolio. Combined with the take-rate revenue model and some of the policy changes we saw on the 3P side from Amazon, it became clear that the 1P side of this business is much more attractive and has much more overlap with our ideal customer profile than the 3P side.
Got it. Helpful.
We did not calculate ARPU any differently. Because we kept the calculation consistent, it skewed in the quarter. The way the calculation works is the average customer count at the beginning and end of the period. We had those approximately 7,300 3P customers in the beginning customer count, but they were not in the ending customer count. The full 3P revenue was in the quarter, but not the ending customer count. Because of that, ARPU skewed higher than it normally would have. Going forward, we will have 1P customers in the beginning and end of the period, so ARPU will be more consistent than it was in Q2.
Awesome. And if I may, a quick third question: Joe, can you quantify what the third-party revenue recovery revenues were in the second half of 2025? I know you said the business will grow high single digits excluding that. Any further modification would be helpful.
Scott, the only additional color we are providing is that we pulled out the $10.5 million impact in the second half of the year for the divested business. You can assume the first half of this year was slightly lower than that to get a full run rate for the business for 2026. Outside of that, we are not providing further detail on the 3P business.
And our next question will come from Dylan Tyler Becker with William Blair. Please go ahead.
Hey, guys. This is Jackson Bogli on for Dylan. Maybe sticking on the revenue recovery side: now that the focus is solely on the 1P side of that business, how are you thinking about the level of resources and investment dedicated to that business going forward? Is there more resources being redeployed toward fulfillment and analytics, or does the retained 1P opportunity still warrant incremental investment from here? Got it. Super helpful. And as a follow-up, with ERP migration still creating a little bit of timing noise, are you seeing any change in onboarding duration? I know you talked about AI-enabled customer onboarding. Is that changing customer readiness or attach rates once those projects are complete? Or are there areas where migration delays are building pent-up expansion demand that could release once go-lives occur? Thanks.
Jackson, the 1P business is approaching consistency with our overall margin profile. It was not that way right out of the gate with the acquisitions, but as those products have been integrated, the business has come closer to our company margin profile. I would not say it is receiving oversized investment at this time. The divestiture of the 3P side of that business helps because there is good customer and product overlap on the 1P side with the rest of our portfolio. We believe the revenue recovery business is in line with the margin profile of our overall business. Regarding onboarding, we are excited about Agentic onboarding. We completed the first fully Agentic onboarding for simpler onboarding profiles, reducing processes that previously took days down to minutes. For more complex onboarding, such as ERP integrations, we expect to continue making great progress. We have been improving ERP onboarding speed over the last couple of years, which has led to a better customer experience and higher gross margin. Agentic capabilities will further accelerate the more complex ERP onboarding, but there is still work to do. Any efficiencies we gain there will help customers and speed up access to the network. I would not characterize a substantial pent-up demand solely waiting for this; the ERP market has been a bit slower in 2025 and so far this year at the medium-to-large end. But improved ERP onboarding speed will be a differentiator and accelerate customer time to value.
And our next question will come from Christopher Quintero with Morgan Stanley. Please go ahead.
Hey, Chad. Hey, Joe. Thanks for taking the questions, and congrats on the execution. I want to hear your thoughts on the macro environment and what you are hearing from customers. We are hearing about higher fuel costs, higher freight costs, and a K-shaped economy. What are you seeing from a macro perspective?
Christopher, we are not hearing substantial headwinds from customers relative to the macro. We came off a tougher 2025 on the supplier side where customers cited tariffs and some contract resizing, which we anticipated would dissipate as those contracts were one-time, and that is playing out. So far, fuel prices and tariff uncertainty are items we continue to monitor, but they are not coming up in our engagements with customers currently.
Got it. And Joe, on the 1P customer counts, if I have my math right, it seems down around 200 quarter over quarter. Is that right? If so, what are you seeing on enablement and new customer adds?
That calculation is right. We were down a little over 200 sequentially on customer count. The driver was timing of some retail enablement programs. Customers who churn or add tend to be lower ARPU customers, which is why we were able to deliver the financial results despite the lower customer count. The pipeline for enablement activity is strong; programs running now will contribute in the second half and the remaining pipeline that is expected to close in the second half looks positive. For the year, I would expect customer counts to be flat to slightly positive, with some momentum from second-half enablement carrying into early 2027.
And our next question will come from George Kurosawa with Citi. Please go ahead.
Thanks. Maybe about the Max beta: you had some customer anecdotes of large savings. Could you share updated thoughts on market sizing, how you think about potential uplift in a best-case or median scenario, and how that has evolved your packaging and pricing as the product portfolio expands?
George, in the beta we have seen customers identify supply chain anomalies and disruptions using Max chat, resulting in hard ROI. Many interactions in chat could be automated with an agent: tasks that currently take many prompts can be automatically detected and in some cases automatically resolved. We are developing autonomous agents on top of Max, which can identify and resolve anomalies, delivering ROI and headcount efficiency for customers. We are converting the chat capability from beta into general availability. All newly deployed customers in the last month have been onboarded with Max included, and over the course of the summer we will make it available to all our fulfillment customers as part of their standard subscription. We believe the major monetization opportunity will be when we deliver autonomous agents on top of the chat capability. Those agents will be offered in tiered bundles and monetized via subscription. We already see customers using Max chat to derive benefits, which gives us confidence we can automate many of those interactions with agentic architecture and monetize them.
Okay. One for Joe: looking at the guidance, it seems the Q2 beat flowed through on revenue excluding the divestiture, but not fully on EBITDA. Any incremental spending, expense timing, or conservatism to keep in mind on the EBITDA line?
On the EBITDA side, a couple items to consider: some expenses moved from Q2 into Q3 and Q4, which shifted timing. We also want to be prudent with internal AI costs as we build out Max and our internal agents. We want room to make those investments and maintain flexibility in the cost structure, which is why we did not flow all of the Q2 beat through the rest of the year.
And our next question will come from Parker Lane with Stifel. Please go ahead.
Good afternoon. Chad, you talked about advances on the analytics side with a new enhanced platform. The revenue side was up modestly in the first half. What are you seeing from a demand perspective for analytics, and what are your expectations for the second half? Also, coming up on two years since entering first-party revenue recovery with SupplyPike: how have attach and adoption rates trended at the two-year mark, and what are learnings on go-to-market for cross-selling both into the historical SupplyPike base and SPS's base?
We are excited about the analytics replatform. The new platform improves the user experience, speed to insight, and prebuilt capabilities. It also changes the underlying data architecture, setting it up for AI features to add over time. We are optimistic about the analytics outlook. It remains somewhat discretionary, but with replatforming and future AI features, we expect to be in a stronger competitive position and be able to monetize additional capabilities over time. On cross-sell, we have had success in both directions: selling fulfillment to SupplyPike customers and selling revenue recovery to fulfillment customers. The big wins have been selling revenue recovery to fulfillment customers. We have hardened our cross-selling muscle, adjusted sales incentives and used network signals to identify the most likely candidates for revenue recovery within fulfillment customers. Based on trading volumes and partner relationships, we can estimate prospective recovery opportunities, which is critical to driving ARPU expansion.
And our next question will come from Matthew Van Vliet with Cantor. Please go ahead.
Thanks for taking the question. Following up on MAX monetization: what are you baking in for the cycle for existing customers, when do you plan to have bundles in place, and what uplift might existing customers see if they adopt mid or high-tier bundles on an annual basis?
If we judge adoption based on Max chat usage, we expect strong agent adoption because customers that are onboarded with Max chat are quickly using it as their primary interface for our applications. We believe many chat interactions can be automated into agents, so customers will want to move to automation to reduce manual interaction. We expect to be able to sell agents by late Q4 of this year; that will take time to flow through revenue, but we expect to monetize the agent architecture this year. Initial agents will address more complex customers with many trading relationships, and over time we will bring agents to medium and smaller customers. The degree of ARPU uplift is still being worked through, but we believe it will be meaningful for higher-complexity customers.
Helpful. Joe, you mentioned internal AI use and timing. Can you outline when you will be pushing internal AI more broadly across the employee base and when we might lap that so growth can provide operating leverage?
A lot of the leverage we are seeing now is driven by economies of scale and operational improvements over the last 12 months, not yet from internal AI initiatives. We have optimized processes internally, which structurally improved the business without AI. Going forward, onboarding process efficiencies and go-to-market improvements will be additive to the gains we've already made. We feel good about margin trajectory this year and into next year. As we exit this year, we will provide more color on the longer-term impacts.
And our next question will come from Mark Schappel with Loop Capital. Please go ahead.
Thanks. Chad, you have had a new Chief Commercial Officer on board for a couple of quarters. Could you talk about changes to the sales structure, customer segmentation, or the coverage model?
We evolved the go-to-market in conjunction with Eduardo's arrival. We focused sales incentives on cross-sell, segmented the sales force more between new and existing customers, and aligned customer success with onboarding activity. These changes have worked effectively, especially on the retail side. Eduardo brought experience from scaled software businesses and helped us mature go-to-market capabilities. We also added a new chief marketing officer who improved demand generation. Historically, we've relied heavily on retail enablement programs for new customers; over time we expect to drive more new customers through digital marketing.
And our next question will come from Jeff Van Rhee with Craig Hallum. Please go ahead.
This is Daniel on for Jeff. On the beat this quarter, the last few quarters were more in line. Congrats on the nice beat on both top and bottom. What played out in the quarter that drove the more-than-expected strength in Q2?
A couple things: we are not seeing the same pressure on down-sell and retention that we saw in 2025. Gross retention rate continues to be a strength and is growing year-over-year. We are seeing more momentum within our existing customer base and adding trading partners. The land-and-expand model continues to drive growth. So the combination of expanding trading partners within our existing base and improved GRR were the two big drivers of the revenue outperformance.
Thanks. On the customer count — excluding the divested accounts, 1P count was down 52 sequentially. Any updated expectations for customer growth?
That was due to timing of retail enablement programs and how they contributed to customer count in the quarter. Overall, the retail programs that are running and in the pipeline look positive for the second half. For the year, I would expect customer count to be flat to slightly positive.
And our next question will come from Lachlan Brown with Rothschild & Co. Please go ahead.
Hi, Chad and Joe. With your Max beta customers, can you walk us through your confidence in converting them when Max is made generally available at the end of the summer? Describe the go-to-market playbook to transition accounts at launch and any feedback from preliminary customer discussions.
In the beta we have been very engaged with customers and tracked ROI from Max chat interactions. We can score interactions and identify where customers are getting value from Max chat. For upselling from Max chat into our agent architecture, we will target larger, more complex customers with high chat usage and work with them to convert chat workflows into autonomous agents that handle tasks automatically. Between the ROI customers see and the efficiencies from converting chat into autonomous agents, we have high conviction customers will move toward the more agentic, monetizable approach.
Thanks. Looking at implied Q4 revenue in the outlook, it suggests a step up from Q3. Could you unpack the building blocks for that acceleration? Are specific enablement campaigns scheduled later in the year that provide visibility?
A couple factors are contributing. Momentum on the gross retention rate is a significant driver; we are in a stronger position on GRR than a year ago. On the enablement side, more campaigns are coming through and the pipeline is strong, so we expect a solid number of customers to land in Q4, which is driving revenue in that quarter.
To add, the main drivers to finish the year are strong GRR and ARPU expansion. We do expect positive customer count, but customer additions from retail enablement programs are typically low ARPU initially. Long term they matter, but in the near term the ARPU expansion and retention are more meaningful for revenue.
And our next question will come from Nehal Chokshi with Northland Capital Markets. Please go ahead.
Congrats on a good quarter and the implied acceleration in the back half, especially Q4. You mentioned improving GRR — is that driven by Max or something else?
It's a combination. Some of it is macro: the headwinds we saw in 2025 dissipated as contracts were rightsized. We've also improved our customer treatment strategy, onboarding, and sales organization focus on existing customers. Additionally, innovations like Max, investment in revenue recovery, and analytics show customers we are a long-term partner, which supports retention.
Our next question will come from Clark Wright with D.A. Davidson. Please go ahead.
If we look at growth mix after the 3P revenue recovery divestiture, how much growth do you expect from ARPU expansion versus customer additions?
Over the long term, our algorithm anticipates roughly one-third of growth from customer count and two-thirds from ARPU. This year will likely skew more toward ARPU. In our current expectation, that leads to high single-digit ARPU growth and low single-digit customer count growth.
You mentioned SPS is uniquely positioned to provide agents to automate tasks. Why is SPS uniquely positioned versus other vendors and what does that mean as you invest to grow your competitive advantage?
Our advantage comes from the data on our network. First, we often have broader supply chain data for customers than they have in their ERP. Second, we observe macro transaction patterns across the network, which allow us to identify differences in how retailers handle suppliers and translate that into guidance. Third, over 25 years we've built proprietary databases of supply chain expectations and retailer compliance rules. A lot of this information isn't available in public vendor guides. We can train agents on this proprietary database to guide suppliers to execute their supply chain in ways that are compliant with retailers and distributors. Those data and domain advantages give us a unique position for agentic automation.
I am showing no further questions in the queue. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day. You may now disconnect your lines at this time.