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Shopify Inc. (SHOP - Free Report) delivered first-quarter 2018 non-GAAP earnings of 4 cents per share much better than year-ago quarter’s loss of 4 cents. Moreover, earnings beat the Zacks Consensus Estimate by 9 cents.
Revenues surged 68.3% from the year-ago quarter to $214.3 million, comfortably surpassing the Zacks Consensus Estimate of $201.6 million. The figure was also better than the guided range of $198-$202 million.
Shopify continues to launch a number of merchant-friendly applications to meet the requirements of a dynamic retail environment, consequently adding to its merchant base. Top-line growth benefited from an expanding merchant base.
Notably, shares of Shopify have gained 24.6% year-to-date, substantially outperforming industry’s decline of 8%.
Quarter Details
Subscription Solutions revenues surged 61.4% to $100.2 million driven by the persistent solid growth in Monthly Recurring Revenue (“MRR”) with the addition of several new merchants.
As of Mar 31, 2018, MRR was $32.5 million, up 57% from the year-ago quarter figure of $20.7 million. Shopify Plus accounted for $7 million representing 22% of MRR compared with 17% in the quarter ended Mar 31, 2017.
Merchant Solutions revenues soared 75% to $114.1 million, driven primarily by growth in Gross Merchandise Volume (“GMV”), which soared 64% from the year-ago quarter to $8.0 billion. Growth was also evident from robust performance of Shopify Shipping and Shopify Capital, revenues of each growing more than 50% on a year-over-year basis.
Gross Payments Volume (“GPV”) came in at $3 billion, accounting for 38% of GMV processed in the first quarter up from $1.8 billion (38%) in the prior-year quarter.
Notably, Shopify’s Instagram channel and integration of Google Pay (introduced in March this year) and Apple Pay services have helped the company connect to a wide customer base, ultimately increasing the number of active users on the platform. To make transactions easier for its merchants, Shopify is continuously focusing on the development of mobile applications.
Shopping on Instagram was expanded to France, the U.K., Canada, Australia, Germany, Italy, Brazil and Spain in March, 2018.
Purchases from merchants’ stores from mobile devices witnessed 75% of traffic and garnered 64% of orders for the quarter ended Mar 31, 2018, up from 69% and 59%, respectively, reported in the year-ago quarter.
Additionally, Smile With Lay’s shop, was introduced in Shopify Plus during the quarter which enables customers to personalize a bag of Lay’s potato chips by featuring their face on it. Marrine, new shops of PepsiCo and Nestle were also added.
Management was particularly positive about the company’s partner ecosystem that helps it to identify and reach out to merchants otherwise inaccessible. Around 16,000 partners referred merchants to Shopify in the past 12 months.
Operating Details
Non-GAAP gross profit soared 71.4% to $124.3 million. Non-GAAP gross margin consequently expanded by 110 basis points (bps), primarily driven by revenue growth in partner referral fee. Robust performance of Shipping and Capital favored margins.
Moreover, the risk posed by strained Subscription Solutions margins due to transition to cloud was offset by margin growth.
Adjusted operating loss was $0.2 million compared with loss of $4.3 million in the year-ago quarter.
Shopify ended the quarter with cash, cash equivalents and marketable securities balance of $1.58 billion up from $938 million in the previous quarter, primarily owing to proceeds from company’s offering of 4.8 million (Class A subordinate voting) shares in February.
Guidance
For second-quarter 2018, Shopify projects revenues in the range of $230-$235 million. The Zacks Consensus Estimate for the same is pegged at $227.3 million.
Adjusted operating loss is expected to be in the range of $5-$7 million.
For full-year 2018, Shopify raised outlook. Management now projects revenues in the range of $1-$1.01 billion, better than the previous guided range of $970-$990 million. The Zacks Consensus Estimate is currently pegged at $995.7 million.
Adjusted operating income for fiscal 2018 is now guided in the range of $0-$5 million, compared with the previous band of ($5)-$5 million.
Conclusion
With a view to make the platform more merchant friendly, Shopify is working on extending language capabilities beyond English. We believe this inclusive move will boost engagement and consequently increase adoption going forward. Further, shopping on Instagram was expanded to 35 countries in April.
Shopify has been developing various apps, including various augmented reality (“AR”) based applications to streamline customer experience, The first-of-its-kind merchant product on the Shopify platform has been built on Shopify Mobile Buy SDK and Apple 's ARKit, enabling users to check how the goods look in real life surroundings.
Moreover, investments in latest technological developments such as Virtual Reality and Augmented Reality will reap benefits for the company going forward.
The long-term earnings growth rate for Western Digital, Mellanox and Micron areprojected at 19%, 15% and 10%, respectively.
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Image: Bigstock
Shopify's (SHOP) Q1 Earnings & Revenues Top, Raises '18 View
Shopify Inc. (SHOP - Free Report) delivered first-quarter 2018 non-GAAP earnings of 4 cents per share much better than year-ago quarter’s loss of 4 cents. Moreover, earnings beat the Zacks Consensus Estimate by 9 cents.
Revenues surged 68.3% from the year-ago quarter to $214.3 million, comfortably surpassing the Zacks Consensus Estimate of $201.6 million. The figure was also better than the guided range of $198-$202 million.
Shopify continues to launch a number of merchant-friendly applications to meet the requirements of a dynamic retail environment, consequently adding to its merchant base. Top-line growth benefited from an expanding merchant base.
Notably, shares of Shopify have gained 24.6% year-to-date, substantially outperforming industry’s decline of 8%.
Quarter Details
Subscription Solutions revenues surged 61.4% to $100.2 million driven by the persistent solid growth in Monthly Recurring Revenue (“MRR”) with the addition of several new merchants.
As of Mar 31, 2018, MRR was $32.5 million, up 57% from the year-ago quarter figure of $20.7 million. Shopify Plus accounted for $7 million representing 22% of MRR compared with 17% in the quarter ended Mar 31, 2017.
Merchant Solutions revenues soared 75% to $114.1 million, driven primarily by growth in Gross Merchandise Volume (“GMV”), which soared 64% from the year-ago quarter to $8.0 billion. Growth was also evident from robust performance of Shopify Shipping and Shopify Capital, revenues of each growing more than 50% on a year-over-year basis.
Gross Payments Volume (“GPV”) came in at $3 billion, accounting for 38% of GMV processed in the first quarter up from $1.8 billion (38%) in the prior-year quarter.
Notably, Shopify’s Instagram channel and integration of Google Pay (introduced in March this year) and Apple Pay services have helped the company connect to a wide customer base, ultimately increasing the number of active users on the platform. To make transactions easier for its merchants, Shopify is continuously focusing on the development of mobile applications.
Shopping on Instagram was expanded to France, the U.K., Canada, Australia, Germany, Italy, Brazil and Spain in March, 2018.
Purchases from merchants’ stores from mobile devices witnessed 75% of traffic and garnered 64% of orders for the quarter ended Mar 31, 2018, up from 69% and 59%, respectively, reported in the year-ago quarter.
Additionally, Smile With Lay’s shop, was introduced in Shopify Plus during the quarter which enables customers to personalize a bag of Lay’s potato chips by featuring their face on it. Marrine, new shops of PepsiCo and Nestle were also added.
Management was particularly positive about the company’s partner ecosystem that helps it to identify and reach out to merchants otherwise inaccessible. Around 16,000 partners referred merchants to Shopify in the past 12 months.
Operating Details
Non-GAAP gross profit soared 71.4% to $124.3 million. Non-GAAP gross margin consequently expanded by 110 basis points (bps), primarily driven by revenue growth in partner referral fee. Robust performance of Shipping and Capital favored margins.
Moreover, the risk posed by strained Subscription Solutions margins due to transition to cloud was offset by margin growth.
Adjusted operating loss was $0.2 million compared with loss of $4.3 million in the year-ago quarter.
Shopify Inc. Price, Consensus and EPS Surprise
Shopify Inc. Price, Consensus and EPS Surprise | Shopify Inc. Quote
Balance Sheet
Shopify ended the quarter with cash, cash equivalents and marketable securities balance of $1.58 billion up from $938 million in the previous quarter, primarily owing to proceeds from company’s offering of 4.8 million (Class A subordinate voting) shares in February.
Guidance
For second-quarter 2018, Shopify projects revenues in the range of $230-$235 million. The Zacks Consensus Estimate for the same is pegged at $227.3 million.
Adjusted operating loss is expected to be in the range of $5-$7 million.
For full-year 2018, Shopify raised outlook. Management now projects revenues in the range of $1-$1.01 billion, better than the previous guided range of $970-$990 million. The Zacks Consensus Estimate is currently pegged at $995.7 million.
Adjusted operating income for fiscal 2018 is now guided in the range of $0-$5 million, compared with the previous band of ($5)-$5 million.
Conclusion
With a view to make the platform more merchant friendly, Shopify is working on extending language capabilities beyond English. We believe this inclusive move will boost engagement and consequently increase adoption going forward. Further, shopping on Instagram was expanded to 35 countries in April.
Shopify has been developing various apps, including various augmented reality (“AR”) based applications to streamline customer experience, The first-of-its-kind merchant product on the Shopify platform has been built on Shopify Mobile Buy SDK and Apple 's ARKit, enabling users to check how the goods look in real life surroundings.
Moreover, investments in latest technological developments such as Virtual Reality and Augmented Reality will reap benefits for the company going forward.
Zacks Rank & Other Stocks to Consider
Currently, Shopify carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the broader technology sector worth considering are Western Digital Corporation (WDC - Free Report) , Mellanox Technologies, Ltd. and Micron Technology, Inc. (MU - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Western Digital, Mellanox and Micron areprojected at 19%, 15% and 10%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>