SPS Commerce helps retailers find all paths to consumer

Archie Black had reason to beam last week.

The CEO of Minneapolis-based SPS Commerce hosted 300 retailers, vendors and logistics experts at a three-day "SPS Omnichannel" conference at the downtown Marriott.

It was testimony to SPS' growing prominence as a software provider that helps retailers reach customers who want the best of online and in-store shopping.

"We are a market leader with a large opportunity ahead of us, and we continue to execute on our growth strategy," Black said.

At last week's conference, SPS and partner NetSuite announced a joint service they said would help retailers "keep pace with the needs of the omnichannel consumer with a consistent experience across any touchpoint, any channel, anytime, anywhere."

In short, the goal is to help retailers reach consumers online, via mobile gadget or in a store — or in any combination.

SPS has been a pretty good story for Minneapolis. Employment has grown from 75 people in 2002 to 800, including 650 in downtown's Accenture Tower.

"The stock price is not something the company is focused on," Black e-mailed in response to a question Friday. "If we continue to execute and build the company … stock price takes care of itself."

SPS makes money from 18,000-plus distributors and retailers it helps to get products to the right shelves and warehouses. It also electronically slices and dices results for retailers and suppliers so they know what sells when and where and in what volumes.

"We have been able to take the priorities of both suppliers and retailers and develop one solution, creating a genuine partnership between suppliers and retailers," Black told analysts last month. "Given our leadership in the retail ecosystem, we've spent a lot of time and resources innovating around our platform."

The secret sauce in the software-as-a-service that SPS concocts and peddles, for example, helps Converse sport shoes understand what model and color sells at Target, a Kohl's or Dick's Sporting Goods at what times and on what days.

"Our intention is to build a world-class retail platform power, a remaking of the industry, from Minneapolis," said Peter Zaballos, SPS marketing vice president, and a computer scientist who once worked at RealNetworks, a pioneer in creating Internet digital media years ago.

Black, 53, a CPA by training from the western suburbs, has had a great run in recent years. He is a regular seller of SPS stock under pre-announced sales that he says help him diversify his wealth.

In 2013, Black took home $5.1 million in total compensation, nearly double his 2012 take. Black earned cash compensation of $733,000 and $4 million from exercised gains on past-year issued stock options, compared to $2 million in gains in 2012.

"SPS continues to be a major holding for me," said Black, who directly owns about 34,000 shares worth about $1.7 million and optionable shares worth millions more.

Analysts expect SPS Commerce, which had $104 million in 2013 revenue and about $1 million in profit, to increase both by about 20 percent this year.

Scott Berg, an analyst at Northland Securities who has followed SPS for years, expects that SPS will be acquired by a larger software player within a few years. That could be Oracle, SAP or IBM. And then there's California-based Salesforce.com, the granddaddy of software-as-service firms. It provides enterprise cloud computing solutions to businesses and industries worldwide.

Staff writer Patrick Kennedy contributed to this report.