SPS Commerce Inc (SPSC)

Return on equity (ROE)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	US$ in thousands	65,824	55,134	44,597	45,586	33,712
Total stockholders’ equity	US$ in thousands	667,475	537,073	484,259	420,721	354,876
ROE		9.86%	10.27%	9.21%	10.84%	9.50%

December 31, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $65,824K ÷ $667,475K
= 9.86%

To analyze SPS Commerce Inc.'s return on equity (ROE) over the past five years, we observe a fluctuating trend in the company's ability to generate profits from shareholders' equity.

In 2023, the ROE decreased to 9.86% from 10.27% in 2022, indicating that the company's efficiency in utilizing shareholder funds to generate profits slightly declined. Despite this decrease, the ROE remained above 9% in 2023.

Comparing 2023 to 2021, we see a slight improvement from 9.21% to 9.86% in ROE, suggesting a better return on equity for shareholders. However, it is worth noting that the ROE peaked at 10.84% in 2020, before declining in subsequent years.

The average ROE over the five-year period stands at 9.93%, showcasing a moderate return to shareholders relative to the company's equity base. This metric indicates that SPS Commerce Inc. has been maintaining a steady performance in generating profits from shareholders' investments, albeit with slight fluctuations from year to year.

Further analysis and consideration of the company's business strategies, market conditions, and overall financial health would provide a more comprehensive assessment of SPS Commerce Inc.'s ROE performance and its implications for investors.