The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements regarding us, our business prospects and our results of operations are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Similarly, statements that describe our future plans, objectives or goals are also forward-looking. Forward-looking statements may also be made from time to time in oral presentations, including telephone conferences and/or webcasts open to the public. Shareholders, potential investors, and others are cautioned that all forward-looking statements involve risks and uncertainties that could cause results in future periods to differ materially from those anticipated by some of the statements made in this report, including the risks and uncertainties described under the heading “Risk Factors” appearing in our Annual Report on Form 10-K for the year ended December 31, 2025, as may be updated in our subsequent Quarterly Reports on Form 10-Q or other filings from time to time. We expressly disclaim any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise interested parties of the risks and factors that may affect our business.
Overview
SPS Commerce is the leading intelligent supply chain network that connects retailers, brands, distributors, manufacturers, and logistics providers through shared infrastructure built to handle the complexity of modern commerce operations. Our network enables companies to connect once and immediately transact with thousands of trading partners without negotiating standards, building integrations, or maintaining compliance logic.
Our network powers our portfolio of solutions that orchestrate the critical processes, protocols, and data exchanges needed to get the right product, in the right place, at the right time, every time. We have embedded deep expertise, proven processes, and compliance logic built from over 20 years of commerce intelligence into every connection, delivering a full-service experience that empowers partners to move forward faster, together.
We plan to continue to grow our business by further penetrating the supply chain management market, increasing revenues from our customers as their businesses grow, expanding our distribution channels, expanding our international presence and, from time to time, developing new products and applications. We also intend to selectively pursue acquisitions that will add customers, allow us to expand into new regions, or allow us to offer new functionalities.
Key Financial Terms, Metrics and Non-GAAP Measures
We have several key financial terms, metrics, and non-GAAP measures as discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Recurring Revenue - We define recurring revenue as active contracts during the reporting period under which the customer regularly pays us fees for subscription-based and reoccurring services. All components of the contracts that are not expected to recur (primarily set-ups and professional services) are excluded from recurring revenue.
Recurring Revenue Customers - We define recurring revenue customers as customers with an active recurring revenue contract at the end of the period. A small portion of our recurring revenue customers consist of separate units within a larger organization and are separately invoiced. We treat each of these units, which may include divisions, departments, affiliates and franchises, as distinct recurring revenue customers. Following the divestiture of our 3P Revenue Recovery business on June 30, 2026, all recurring revenue customers are classified as 1P. Prior-period references to 3P relate to customers that only had an online marketplace or e-Commerce connection within our network.
SPS COMMERCE, INC. 21 Form 10-Q for the Quarterly Period ended June 30, 2026
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Annual Revenue Per User ("ARPU") - We calculate the annualized average recurring revenues per recurring revenue customer, by dividing the annualized recurring revenues for the period by the average of the beginning and ending number of recurring revenue customers for the period.
Non-GAAP Financial Measures - To supplement our condensed consolidated financial statements, we provide investors with Adjusted EBITDA, Adjusted EBITDA Margin, and non-GAAP income per share, all of which are non-GAAP financial measures. We believe that these non-GAAP financial measures provide useful information to our management, Board of Directors, and investors regarding certain financial and business trends relating to our financial condition and results of operations.
Our management uses these non-GAAP financial measures to compare our performance to that of prior periods for trend analyses and planning purposes. Adjusted EBITDA is also used for purposes of determining executive and senior management incentive compensation. We believe these non-GAAP financial measures are useful to an investor as they are widely used in evaluating operating performance. Adjusted EBITDA and Adjusted EBITDA Margin are used to measure operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of capital structure and the method by which assets were acquired.
These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in our condensed consolidated financial statements and are subject to inherent limitations. Investors should review the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures that are included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
SPS COMMERCE, INC. 22 Form 10-Q for the Quarterly Period ended June 30, 2026
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Results of Operations
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
The following table presents our results of operations for the periods indicated:
Three Months Ended June 30,
2026 2025 Change
($ in thousands) $ % of revenue(1) $ % of revenue(1) $ %
Revenues $ 197,815 100 % $ 187,400 100 % $ 10,415 6 %
Cost of revenues 59,028 30 59,826 32 (798) (1)
Gross profit 138,787 70 127,574 68 11,213 9
Operating expenses
Sales and marketing 43,936 22 43,434 23 502 1
Research and development 16,957 9 17,271 9 (314) (2)
General and administrative 36,646 19 30,890 16 5,756 19
Amortization of intangible assets 9,381 5 9,509 5 (128) (1)
Loss on sale of business 23,454 12 — — 23,454 n/a
Total operating expenses 130,374 66 101,104 54 29,270 29
Income from operations 8,413 4 26,470 14 (18,057) (68)
Other income, net 1,997 1 773 — 1,224 158
Income before income taxes 10,410 5 27,243 15 (16,833) (62)
Income tax expense 3,546 2 7,510 4 (3,964) (53)
Net income $ 6,864 3 % $ 19,733 11 % $ (12,869) (65) %
(1) Amounts in column may not foot due to rounding
Revenues - The increase in revenue period-over-period resulted from an increase in 1P recurring revenue customers that was driven primarily by business acquisitions and continued business growth in our core markets.
•ARPU increased 14% to approximately $15,100 for the three months ended June 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.
•The number of recurring revenue customers decreased 14% to approximately 46,650 at June 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business, which resulted in a decrease of approximately 8,200 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.
Recurring revenues increased 6% to $190.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Recurring revenues accounted for 96% of our total revenues for both the three months ended June 30, 2026 and 2025. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.
Cost of Revenues - The decrease in cost of revenues was primarily attributable to $1.7 million lower third-party personnel costs and $0.9 million lower software costs due to platform consolidation, partially offset by a $1.5 million increase in depreciation expense.
Sales and Marketing Expenses - The increase in sales and marketing expense was primarily attributable to a $1.2 million increase in third-party personnel costs, partially offset by a $0.7 million decrease in marketing spend.
Research and Development Expenses - The decrease in research and development expense was primarily driven by a $0.4 million decrease in depreciation expense resulting from lower capitalized research and development activities related to an acquired business.
General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $2.8 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of
SPS COMMERCE, INC. 23 Form 10-Q for the Quarterly Period ended June 30, 2026
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equity awards upon executive retirement. Personnel-related costs also increased by $2.2 million due to higher consulting costs supporting internal initiatives and increased headcount, while hardware and software costs increased by $1.1 million, primarily due to higher amortization expense related to system implementations. These increases were partially offset by a $0.5 million decrease in charitable contribution expense.
Amortization of Intangible Assets - The decrease in amortization expense was primarily due to the normal run-off of amortization related to finite-lived intangible assets.
Loss on Sale of Business - The loss on sale of business was due to the divestiture of the 3P portion of the revenue recovery business. Refer to Note B – Business Acquisitions and Other Transactions for more information regarding the divestiture.
Other Income, Net - The increase in other income, net was primarily due to higher investment income, the favorable remeasurement of an acquisition-related earn-out liability, and an increase in unrealized foreign currency gains.
Income Tax Expense - The decrease in income tax expense was primarily driven by the reduction in pre-tax book income related to the loss on sale of business. The decrease was partially offset by the reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price.
Adjusted EBITDA - Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the three months ended June 30, 2026, included the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs. Net income is the most directly comparable GAAP measure of financial performance.
The following table provides a reconciliation of net income to Adjusted EBITDA:
Three Months Ended June 30,
(in thousands) 2026 2025
Net income $ 6,864 $ 19,733
Income tax expense 3,546 7,510
Depreciation and amortization of property and equipment 6,150 4,991
Amortization of intangible assets 9,381 9,509
Stock-based compensation expense 18,696 14,998
Realized gain from investments and foreign currency transactions (402) (107)
Investment income (1,211) (688)
Loss on sale of business 23,454 —
Other 154 106
Adjusted EBITDA $ 66,632 $ 56,052
Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.
SPS COMMERCE, INC. 24 Form 10-Q for the Quarterly Period ended June 30, 2026
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The following table provides a comparison of Margin to Adjusted EBITDA Margin:
Three Months Ended June 30,
(in thousands, except Margin and Adjusted EBITDA Margin) 2026 2025
Revenue $ 197,815 $ 187,400
Net income 6,864 19,733
Margin 3 % 11 %
Adjusted EBITDA 66,632 56,052
Adjusted EBITDA Margin 34 % 30 %
Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the three months ended June 30, 2026, the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.
The following table provides a reconciliation of net income per share to non-GAAP income per share:
Three Months Ended June 30,
(in thousands, except per share amounts) 2026 2025
Net income $ 6,864 $ 19,733
Stock-based compensation expense 18,696 14,998
Amortization of intangible assets 9,381 9,509
Realized gain from investments and foreign currency transactions (402) (107)
Loss on sale of business 23,454 —
Other 154 106
Income tax effects of adjustments (11,770) (6,285)
Non-GAAP income $ 46,377 $ 37,954
Shares used to compute net income and non-GAAP income per share
Basic 36,533 37,965
Diluted 36,577 38,099
Net income per share, basic $ 0.19 $ 0.52
Non-GAAP adjustments to net income per share, basic 1.08 0.48
Non-GAAP income per share, basic $ 1.27 $ 1.00
Net income per share, diluted $ 0.19 $ 0.52
Non-GAAP adjustments to net income per share, diluted 1.08 0.48
Non-GAAP income per share, diluted $ 1.27 $ 1.00
SPS COMMERCE, INC. 25 Form 10-Q for the Quarterly Period ended June 30, 2026
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Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The following table presents our results of operations for the periods indicated:
Six Months Ended June 30,
2026 2025 Change
($ in thousands) $ % of revenue(1) $ % of revenue(1) $ %
Revenues $ 389,936 100 % $ 368,949 100 % $ 20,987 6 %
Cost of revenues 118,245 30 116,740 32 1,505 1
Gross profit 271,691 70 252,209 68 19,482 8
Operating expenses
Sales and marketing 88,670 23 85,068 23 3,602 4
Research and development 34,874 9 34,710 9 164 —
General and administrative 73,020 19 61,908 17 11,112 18
Amortization of intangible assets 18,701 5 18,097 5 604 3
Loss on sale of business 23,454 6 — — 23,454 n/a
Total operating expenses 238,719 61 199,783 54 38,936 19
Income from operations 32,972 8 52,426 14 (19,454) (37)
Other income, net 3,402 1 2,980 1 422 14
Income before income taxes 36,374 9 55,406 15 (19,032) (34)
Income tax expense 9,781 3 13,477 4 (3,696) (27)
Net income $ 26,593 7 % $ 41,929 11 % $ (15,336) (37) %
(1) Amounts in column may not foot due to rounding
Revenues - The increase in revenue period-over-period resulted from an increase in 1P recurring revenue customers that was driven primarily by business acquisitions and continued business growth in our core markets.
•ARPU increased 5% to approximately $14,800 for the six months ended June 30, 2026. The increase was driven by the increased usage of our products by our 1P recurring revenue customers as well as the divestiture of our 3P revenue recovery business.
•The number of recurring revenue customers decreased 14% to approximately 46,650 at June 30, 2026. The decrease was driven by the divestiture of the 3P revenue recovery business (initially acquired in February 2025 as part of the Carbon6 acquisition), which resulted in a decrease of approximately 8,200 3P recurring revenue customers. As of June 30, 2026, all recurring revenue customers are 1P.
Recurring revenues increased 7% to $374.9 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Recurring revenues accounted for 96% and 95% of our total revenues for the six months ended June 30, 2026 and 2025, respectively. We anticipate that the number of recurring revenue customers and ARPU will increase as we execute our growth strategy focused on further penetration of our market.
Cost of Revenues - The increase in cost of revenues was primarily driven by a $2.1 million increase in depreciation expense and a $1.3 million increase in deferred costs due to lower capitalization associated with slower hiring. These increases were partially offset by a $0.9 million decrease in personnel-related costs and $1.1 million of lower software costs due to platform consolidation.
Sales and Marketing Expenses - The increase in sales and marketing expense was primarily driven by a $2.4 million increase in stock-based compensation expense, partially attributable to equity awards granted to executives hired in the prior year, and a $1.3 million increase in third-party personnel costs.
Research and Development Expenses - Research and development expense remained relatively consistent compared to the prior year period.
SPS COMMERCE, INC. 26 Form 10-Q for the Quarterly Period ended June 30, 2026
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General and Administrative Expenses - The increase in general and administrative expense was primarily driven by a $4.9 million increase in stock-based compensation expense, partially attributable to the contractual acceleration of equity awards upon executive retirement. In addition, personnel-related costs increased by $5.0 million, primarily due to increased headcount and non-capitalizable activities supporting system implementations, as well as consulting costs related to internal initiatives.
Amortization of Intangible Assets - The increase in amortization of intangible assets was driven by an additional month of amortization related to intangible assets acquired from Carbon6 in February 2025.
Loss on Sale of Business - The loss on sale of business was due to the divestiture of the 3P portion of the revenue recovery business. Refer to Note B – Business Acquisitions and Other Transactions for more information regarding the divestiture.
Other Income, Net - The increase in other income, net was primarily due to the remeasurement of an acquisition-related earn-out liability.
Income Tax Expense - The decrease in income tax expense was primarily driven by the reduction in pre-tax book income related to the loss on sale of business. The decrease was partially offset by the reduction in tax benefits recognized from equity award exercise and settlement activity due to the fluctuations in share price.
Adjusted EBITDA - Adjusted EBITDA consists of net income adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, realized gain from investments and foreign currency transactions, investment income, loss on sale of business, and other adjustments as necessary for a fair presentation. Other adjustments for the six months ended June 30, 2026 included the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs. Net income is the most directly comparable GAAP measure of financial performance.
The following table provides a reconciliation of net income to Adjusted EBITDA:
Six Months Ended June 30,
(in thousands) 2026 2025
Net income $ 26,593 $ 41,929
Income tax expense 9,781 13,477
Depreciation and amortization of property and equipment 11,984 9,948
Amortization of intangible assets 18,701 18,097
Stock-based compensation expense 36,769 28,865
Realized gain from investments held and foreign currency impact on cash and investments (522) (473)
Investment income (2,362) (2,537)
Loss on sale of business 23,454 —
Other 165 1,119
Adjusted EBITDA $ 124,563 $ 110,425
Adjusted EBITDA Margin - Adjusted EBITDA Margin consists of Adjusted EBITDA divided by revenue. Margin, the comparable GAAP measure of financial performance, consists of net income divided by revenue.
SPS COMMERCE, INC. 27 Form 10-Q for the Quarterly Period ended June 30, 2026
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The following table provides a comparison of Margin to Adjusted EBITDA Margin:
Six Months Ended June 30,
(in thousands, except Margin and Adjusted EBITDA Margin) 2026 2025
Revenue $ 389,936 $ 368,949
Net income 26,593 41,929
Margin 7 % 11 %
Adjusted EBITDA 124,563 110,425
Adjusted EBITDA Margin 32 % 30 %
Non-GAAP Income per Share - Non-GAAP income per share consists of net income adjusted for stock-based compensation expense, amortization expense related to intangible assets, realized gain from investments and foreign currency transactions, loss on sale of business, and other adjustments as necessary for a fair presentation, including for the six months ended June 30, 2026, the expense impact from disposals of other equipment, remeasurement of an acquired earn-out liability, and one-time divestiture exit and disposal costs, and the corresponding tax impacts of the adjustments to net income, divided by the weighted average number of shares of common and diluted stock outstanding during each period. Net income per share, the most directly comparable GAAP measure of financial performance, consists of net income divided by the weighted average number of shares of common and diluted stock outstanding during each period. To quantify the tax effects, we recalculated income tax expense excluding the direct book and tax effects of the specific items constituting the non-GAAP adjustments. The difference between this recalculated income tax expense and GAAP income tax expense is presented as the income tax effect of the non-GAAP adjustments.
The following table provides a reconciliation of net income per share to non-GAAP income per share:
Six Months Ended June 30,
(in thousands, except per share amounts) 2026 2025
Net income $ 26,593 $ 41,929
Stock-based compensation expense 36,769 28,865
Amortization of intangible assets 18,701 18,097
Realized gain from investments held and foreign currency impact on cash and investments (522) (473)
Loss on sale of business 23,454 —
Other 165 1,119
Income tax effects of adjustments (17,649) (13,570)
Non-GAAP income $ 87,511 $ 75,967
Shares used to compute net income and non-GAAP income per share
Basic 36,953 37,978
Diluted 37,026 38,132
Net income per share, basic $ 0.72 $ 1.10
Non-GAAP adjustments to net income per share, basic 1.65 0.90
Non-GAAP income per share, basic $ 2.37 $ 2.00
Net income per share, diluted $ 0.72 $ 1.10
Non-GAAP adjustments to net income per share, diluted 1.65 0.89
Non-GAAP income per share, diluted $ 2.36 $ 1.99
SPS COMMERCE, INC. 28 Form 10-Q for the Quarterly Period ended June 30, 2026
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Critical Accounting Policies and Estimates
This discussion of our financial condition and results of operations is based upon our condensed consolidated financial statements, which are prepared in accordance with GAAP and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The preparation of these condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. On an ongoing basis, we evaluate our estimates, judgments, and assumptions. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that we believe to be reasonable. Our actual results may differ from these estimates under different assumptions or conditions.
A critical accounting policy or estimate is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective, or complex judgments relating to uncertain matters that could have a material effect on our financial condition and results of operations. Accordingly, we believe that our policies for revenue recognition, internally developed software, and business combinations are the most critical to fully understand and evaluate our financial condition and results of operations.
During the six months ended June 30, 2026, there were no changes in our critical accounting policies or estimates. For additional information regarding our critical accounting policies and estimates, see the discussion under "Critical Accounting Policies and Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.
Liquidity and Capital Resources
Sources of Liquidity
As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents of $173.2 million and net accounts receivable of $63.7 million.
Statements of Cash Flows Summary
The summary of activity within the condensed consolidated statements of cash flows was as follows:
Six Months Ended June 30,
(in thousands) 2026 2025
Net cash provided by operating activities $ 121,659 $ 72,306
Net cash used in investing activities (6,970) (155,443)
Net cash used in financing activities (93,171) (51,726)
Operating Activities
The increase in cash provided by operating activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to an increase in net income, as adjusted for non-cash expenses of $19.0 million. Additionally, fluctuations in operating assets and liabilities resulted in an increase of $30.4 million driven by changes in the amount and timing of settlements.
Investing Activities
The decrease in cash used in investing activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to cash used in the prior year to acquire a business of $142.6 million.
Financing Activities
The increase in cash used in financing activities from the six months ended June 30, 2025 to the six months ended June 30, 2026 was primarily due to an increase in cash used for share repurchases of $38.8 million year-over-year to continue to deliver shareholder value.
SPS COMMERCE, INC. 29 Form 10-Q for the Quarterly Period ended June 30, 2026
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Contractual and Commercial Commitment Summary
Our contractual obligations and commercial commitments as of June 30, 2026 are summarized below:
Payments Due by Period
(in thousands) Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total
Operating lease obligations(1) $ (10,000) $ (1,163) $ 6,218 $ 28,650 $ 23,705
Purchase commitments 22,200 39,547 86 — 61,833
Total $ 12,200 $ 38,384 $ 6,304 $ 28,650 $ 85,538
(1) Operating lease obligations include imputed interest and are presented net of lease incentives deemed payable at lease commencement. We expect to utilize approximately $18 million of the available lease incentives under the sixth amendment to our current headquarters lease during the year ending December 31, 2027, with the approximately remaining $15 million to be utilized thereafter.
Future Capital Requirements
Our future capital requirements may vary significantly from those now planned and will depend on many factors, including:
•costs to develop and implement new products and applications, if any;
•sales and marketing resources needed to further penetrate our market and gain acceptance of new products and applications that we may develop;
•expansion of our operations in the U.S. and internationally;
•response of competitors to our products and applications; and
•use of capital for acquisitions.
Historically, we have experienced increases in our expenditures consistent with the growth in our operations and personnel, and we anticipate that our expenditures will continue to increase as we expand our business.
We believe our cash, cash equivalents, and cash flows from our operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.
Foreign Currency Exchange and Inflation Rate Changes
For information regarding the effect of foreign currency exchange and inflation rate changes, refer to the section entitled “Foreign Currency Exchange Risk,” included in Part I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk” of this Quarterly Report on Form 10-Q.