Back to top

Image: Bigstock

Shopify (SHOP) Incurs Loss in Q3, Beats Revenue Estimates

Read MoreHide Full Article

Shopify (SHOP - Free Report) reported a third-quarter 2022 adjusted loss of 2 cents per share. The Zacks Consensus Estimate was pegged at earnings of 7 cents. The company reported earnings of 8 cents in the year-ago quarter.

Total revenues increased 22% year over year to $1.4 billion, which beat the Zacks Consensus Estimate by 2.54%.

Quarter in Detail

Subscription Solutions revenues climbed 12% year over year to $376.3 million, driven by growth in monthly recurring revenues and the addition of new merchants.

Merchant Solutions revenues surged 26% year over year to $989.9 million, driven by strong Gross Merchandise Volume (GMV), which improved 11% year over year to $46.2 billion.

As of Sep 30, 2022, Monthly Recurring Revenues (MRR) were $107 million, up 8% from the year-ago quarter. The growth benefited from more merchants joining the platform and an increase in the number of retail locations using POS Pro.

Shopify Plus revenues were $35.1 million, representing 33% of MRR compared with 28% reported in the year-ago quarter.

Shopify Inc. Price, Consensus and EPS Surprise

Shopify Inc. Price, Consensus and EPS Surprise

Shopify Inc. price-consensus-eps-surprise-chart | Shopify Inc. Quote

Gross Payments Volume (GPV) grew to 25 billion, constituting 54% of GMV processed in the third quarter compared with $20.5 billion (49% of GMV) in the year-ago quarter.

GPV benefited from strong performances by merchants on Shopify Payments, growing adoption of Shopify Plus, increased penetration of Shop Pay, Shopify Markets, Shopify Capital and expanded availability of Shopify’s POS Pro hardware with integrated payments.

Shopify Capital advanced $507.6 million in cash and loans to merchants in the United States, Canada, the U.K. and Australia in the reported quarter, up 29% year over year. Since the launch of Shopify Capital, cumulative merchant cash advances have risen to $4.3 billion, out of which $666.1 million was outstanding as of Sep 30, 2022.

Operating Details

Non-GAAP gross profit increased 11% year over year to $681.8 million from the prior-year period.

Non-GAAP operating expenses surged 52.6% year over year to $845.9 million, reflecting expansion in research & development and sales & marketing teams.

Shopify reported an adjusted operating loss of $45.1 million in the quarter against an operating income of $140.2 million in the year-ago quarter.

Balance Sheet

As of Sep 30, 2022, Shopify ended the reported quarter with cash, cash equivalents and marketable securities balance of $4.9 billion compared with $6.95 billion as of Jun 30, 2022.

Guidance

For 2022, Merchant Solutions will continue to grow as a percentage of GMV, driven by Shopify Payments, Shopify Capital, Shopify Markets, Shop Pay Installments and Shopify Fulfillment (including Delivery), and continue to benefit from the growth of partner revenues.

Merchant Solutions’ year-over-year revenue growth will be more than double that of Subscription Solutions for 2022.

GMV growth will continue to outperform the broader retail market in the second half of 2022.

Zacks Rank & Stocks to Consider

Shopify currently has a Zacks Rank #3 (Hold).

Shopify shares lost 75.5% year to date, underperforming the Zacks Computer & Technologysector’s decline of 38.8%.

Here are some top-ranked stocks worth considering in the broader sector.

ZoomInfo Technologies (ZI - Free Report) currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company is set to report its third quarter 2022 earnings on Nov 1.

ZI’s shares have lost 28.9% in the year-to-date period compared with the Zacks Computer - Integrated Systems industry’s decline of 7.4%.

Tencent Music Entertainment Group (TME - Free Report) also a Zacks Rank #2. The company is set to report its third quarter 2022 earnings on Nov 15.

TME shares have lost 47.6% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 36.7%.

ACM Research (ACMR - Free Report) has a Zacks Rank #2. The company is set to report its third quarter 2022 earnings on Nov 4.

ACMR shares have lost 77.3% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 62.2%.

Published in