Capital After the Founder

Capital After the Founder

The people deciding what SPS does with its cash are almost entirely new. Founder Archie Black, who ran the company from its start-up years through the IPO, handed the chief-executive seat to an outside hire in October 2023; the twenty-year chief financial officer is retiring in 2026, and the revenue and operating chiefs have already turned over. The team now holding the tiller has a short record — and what record it has splits cleanly by horizon: reliable on the near-term profit numbers it guides to, and repeatedly reset on the multi-year strategy promises it makes. That divide, and a capital account that has pivoted from deals to its own stock while the shares fell by two-thirds, is where the report closes.

New hands on the tiller

Chad Collins has served as chief executive and a director since October 2, 2023, hired from the warehouse-software company Körber/HighJump rather than promoted from within [1]. Kimberly Nelson, chief financial officer for nearly twenty years and a fixture from the IPO onward, announced her retirement; Joseph Del Preto — previously CFO of Sprout Social — took the role on March 16, 2026 [2]. The chief revenue officer and the president/COO of the founder era are also gone, and a new chief commercial officer, Eduardo Rosini, joined effective December 1, 2025 with a $1 million cash signing bonus [3]. A near-complete C-suite reshuffle inside roughly two and a half years coincides with the collapse the report opened on — the shares down 65.9% from their trailing three-year high.

The alignment between this team and the stock runs through the pay plan, not the share register. All current directors, nominees, and executive officers as a group — thirteen people — beneficially owned 215,960 shares as of March 30, 2026, an asterisk denoting less than one percent of the company; Collins himself held 22,754 shares [4]. The register is institutional: BlackRock alone holds 15.1% [5]. This is not a founder-controlled company where the operator's own net worth rides with the float; skin in the game here is annual equity grants, refreshed each year, not accumulated ownership.

The board mechanics around that pay are conventional and clean. The chief-executive and chair roles are separate — long-tenured director Philip Soran has held the independent-chair title only since May 2024 — and eight of nine director nominees are independent, with only Collins inside [6]. The board itself refreshed heavily: four of the nine nominees — Chima, Gaurav, McConnell, and Partin — joined in 2025 or 2026, and two of them, Chima and McConnell, were put forward under a February 12, 2026 cooperation agreement with the activist investor Anson Funds Management [7]. The same engagement surfaces again in the capital account below, because the buyback authorization stepped up in the same week.

A record that splits by horizon

On profitability, the new team keeps its word. Management has committed to expanding the adjusted-EBITDA margin by two percentage points a year, reiterated that pledge on the FY2025 call, and delivered: the FY2025 EBITDA guide held even as revenue slipped, landing at roughly $231 million [8]. Revenue itself finished at $751.5 million, below the $758–763 million guided a year earlier, while the profit line came in on plan — the pattern in miniature: the growth promise slipped, the margin promise held.

On multi-year strategy, the record is the reverse. The signature capital decision of the Collins era was Carbon6, acquired in early 2025 and framed on that quarter's call as establishing "SPS as a clear leader in the emerging category of revenue recovery." The entire third-party Amazon-seller business that Carbon6 brought was divested at a $23.5 million loss on sale — reversed at a realized loss inside roughly eighteen months of being announced as leadership [9]. The mechanics of how that acquisition flattered and then subtracted from the customer count are the subject of The Customer Count Break; what matters here is the judgment it reveals. The founder-era blueprint was explicit that deals would be "tuck-in type acquisitions" of add-on products for the recurring base, not company-defining bets — Black told investors as much on the Q4 FY2021 call [10]. The one large deviation from that blueprint is the deal that was undone.

Where the cash actually went

Underneath the strategy narrative, the cash tells its own story, and for most of the past decade it was an M&A story. SPS routed the large majority of its surplus into buying businesses. Goodwill — the premium paid over the tangible worth of what was acquired — rose from $134.9 million at the end of FY2020 to $541.7 million at the end of FY2025, roughly quadrupling, with no impairment ever recorded [11].

Source: FY2025 Annual Report (Form 10-K), Consolidated Balance Sheets; goodwill line item of $541,719 thousand at year-end 2025, and prior 10-K balance sheets [12].

The step-up was not gradual. The two largest deals in company history closed within eighteen months of each other: SupplyPike, effective July 2024, at $211.9 million total consideration, and Carbon6, effective February 2025, at $212.5 million [13]. Each was roughly 64% goodwill — $133.8 million and $136.3 million respectively — and each was partly paid in the company's own shares, $87.2 million and $67.7 million of equity consideration [14]. More of the balance sheet is now acquisition-derived intangible value than at any prior point, and none of it has been tested by a downturn.

SPS funds all of this without leverage. The company carries no debt and pays no dividend; it financed FY2025's combined $142.6 million of acquisitions and $114.3 million of buybacks by drawing its own cash balance down and letting its investment portfolio mature [15]. That all-equity, self-funding policy has a practical consequence for the future: a deal materially larger than SupplyPike or Carbon6 would require the company to raise debt or issue equity for the first time — a capital-structure decision this management has never had to make.

The buyback pivot

As the growth algorithm reset, the cash turned toward the stock. Repurchases went from zero in FY2023 to $37.6 million in FY2024 to $114.3 million in FY2025 [16]. The authorization behind them was raised three times — $100 million in July 2024, another $100 million in October 2025, and an added $200 million in February 2026, for $300 million in standing capacity [17]. That last increase landed in the same week as the Anson cooperation agreement. The buying accelerated into the fall of the stock: by Q2 FY2026 the company was deploying nearly 90% of its free cash flow — $51.2 million in the quarter — to repurchases [18].

Source: FY2025 Annual Report (Form 10-K), Consolidated Statements of Cash Flows — acquisition of business and repurchases of common stock [19].

What the repurchases have not done is shrink the company. Diluted shares outstanding rose every year through the buyback escalation — from 37.48 million in FY2023 to 37.99 million in FY2025 — because the repurchases have run at roughly the pace of stock-based compensation, and the shares SPS bought back were reissued as the equity currency for SupplyPike and Carbon6 [20]. In FY2025, buybacks of $114.3 million sat against $53.7 million of stock compensation; in the two years before, when repurchases were smaller, the compensation add-back exceeded them outright.

Source: FY2025 Annual Report (Form 10-K), Consolidated Statements of Cash Flows — stock-based compensation and share repurchases [21].

The framing shifted with the spending. On the Q1 FY2026 call, Collins told investors that "the most efficient use of our capital today is buying back shares," relegating M&A to "the long term" across three areas [22]. For a company whose cash account had been an M&A account for a decade, that is a genuine reprioritization — and it arrived alongside the deepest part of the drawdown and an enlarged authorization, not in calmer conditions.

Two reads of the same price

The pay plan bites, which is a point in its favor. More than 80% of target executive compensation is long-term equity [23]; the performance shares vest on three-year total shareholder return relative to the Russell 2000, and the annual cash bonus runs off a revenue-and-EBITDA matrix [24]. For 2025, that matrix paid zero: the minimum revenue threshold of $752.9 million was not met, and so no formula bonus was earned by the chief executive or the other named officers — even though reported revenue still grew 17.8% [25]. The internal targets sat above the outcome the market ultimately punished, and the board did not paper over the miss.

Against that backdrop, two informed parties are reading the same price in opposite directions. The sell side has converged its price targets down to the stock: the consensus target mean of $72.73 sits essentially at the $73.39 spot, with the median below it and eight of the covering analysts rated hold — targets that endorse the de-rated price rather than model a recovery. Management, meanwhile, is spending a record sum buying the same shares, as though the de-rating overshot.

Sources: consensus targets and price from reported market data; buybacks and share count from FY2025 Annual Report (Form 10-K), Consolidated Statements of Cash Flows — repurchases of common stock [26].

At the low, management is asking investors to underwrite a specific forward story: that 2025's weakness was "more one-time in nature," that revenue growth inflects in the back half of 2026, and that AI-enabled products lift revenue per customer by an amount it has declined to quantify [27]. That is the same class of multi-year claim the recent record cautions against taking on faith — the 15%-growth framework, the European expansion, the "clear leadership" in revenue recovery were each stated and then dropped or reversed. The near-term margin commitments that sit beside those claims have, by contrast, been kept.

This is where the report's open thread comes to rest rather than resolves. Whether this founder-exited team can produce the per-share result without leaning on either M&A or buybacks is the capital-allocation question this chapter leaves open, and the evidence a reader can hold that team to is dated and checkable: whether diluted shares finally fall as the $300 million authorization is spent, rather than merely offsetting compensation and funding deals; whether the promised organic reacceleration shows up in the reported top line in the back half of 2026; whether the two platform acquisitions ever take a goodwill impairment; and whether a larger deal forces the first debt or equity raise in the company's history. Those four lines will settle which of the two reads of the price was right.