Shopify (SHOP - Free Report) reported third-quarter 2023 adjusted earnings of 24 cents per share, comfortably beating the Zacks Consensus Estimate of 15 cents. The company had reported a loss of 2 cents per share in the year-ago quarter.
Total revenues jumped 25.5% year over year to $1.71 billion, which beat the Zacks Consensus Estimate by 2.94%.
Shopify shares have gained 79.9% year to date, outperforming the Zacks Computer & Technology sector’s growth of 42.8%.
Quarter in Detail
Subscription Solutions revenues increased 28.9% year over year to $486 million, primarily due to more merchants joining the platform, as well as pricing changes for existing merchants on its Standard subscription plans.
Merchant Solutions revenues improved 24.2% year over year to $1.23 billion, driven by robust Gross Merchandise Volume (GMV), which improved 22% year over year to $56.2 billion.
As of Sep 30, 2023, Monthly Recurring Revenues (MRR) were $141 million, up 32% from the year-ago quarter. Shopify Plus revenues were $44 million, representing 31% of MRR compared with 33% in the year-ago quarter.
Gross Payments Volume grew to $32.8 billion, constituting 58% of GMV processed in the third quarter compared with $25 billion (54% of GMV) in the year-ago quarter.
Operating Details
Non-GAAP gross profit increased 32.9% year over year to $905 million. However, the gross margin expanded 290 basis points (bps) year over year to 52.8%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 370 bps year over year to 16.2%. Adjusted general & administrative expenses decreased 420 bps to 4.6%.
Moreover, adjusted research & development expenses, as a percentage of revenues, decreased 750 bps year over year to 14.2%.
Non-GAAP operating expenses decreased 12.9% year over year to $634 million. Operating expenses, as a percentage of revenues, were 37% compared with the year-ago quarter’s figure of 53.3%.
Shopify’s adjusted operating income was $271 million against the year-ago quarter’s operating loss of $47 million.
Balance Sheet
As of Sep 30, 2023, Shopify had cash, cash equivalents and marketable securities balance of $4.92 billion compared with $4.8 billion as of Jun 30, 2023.
Free Cash Flow was $276 million compared with free cash flow of $97 million in the year-ago quarter.
Guidance
For the fourth quarter of 2023, Shopify expects revenue growth in the high teens on a year-over-year basis. Adjusting for a 400-500 bps headwind related to the divestiture of the logistics business, revenues are expected to grow in the low-to-mid-twenties on a year-over-year basis.
The gross margin is expected to be 46%, up 300 to 400 bps year over year. Gross margin is also expected to decline sequentially.
Operating expense is expected to decline low-single-digit sequentially.
For 2023, Shopify expects revenues to grow at a mid-twenties percentage rate on a year-over-year basis. Capital expenditure is expected to be roughly $45 million.
Zacks Rank & Stocks to Consider
Shopify currently carries a Zacks Rank #3 (Hold).
NetEase (NTES - Free Report) , NVIDIA (NVDA - Free Report) and Model N (MODN - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NetEase shares have gained 51.1% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
NVIDIA shares have returned 197.5% year to date. NVDA is set to report its third-quarter fiscal 2024 results on Nov 21.
Model N shares have declined 39.2% year to date. MODN is set to report its fourth-quarter fiscal 2023 results on Nov 9.
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Shopify (SHOP - Free Report) reported third-quarter 2023 adjusted earnings of 24 cents per share, comfortably beating the Zacks Consensus Estimate of 15 cents. The company had reported a loss of 2 cents per share in the year-ago quarter.
Total revenues jumped 25.5% year over year to $1.71 billion, which beat the Zacks Consensus Estimate by 2.94%.
Shopify shares have gained 79.9% year to date, outperforming the Zacks Computer & Technology sector’s growth of 42.8%.
Quarter in Detail
Subscription Solutions revenues increased 28.9% year over year to $486 million, primarily due to more merchants joining the platform, as well as pricing changes for existing merchants on its Standard subscription plans.
Merchant Solutions revenues improved 24.2% year over year to $1.23 billion, driven by robust Gross Merchandise Volume (GMV), which improved 22% year over year to $56.2 billion.
As of Sep 30, 2023, Monthly Recurring Revenues (MRR) were $141 million, up 32% from the year-ago quarter. Shopify Plus revenues were $44 million, representing 31% of MRR compared with 33% in the year-ago quarter.
Gross Payments Volume grew to $32.8 billion, constituting 58% of GMV processed in the third quarter compared with $25 billion (54% of GMV) in the year-ago quarter.
Operating Details
Non-GAAP gross profit increased 32.9% year over year to $905 million. However, the gross margin expanded 290 basis points (bps) year over year to 52.8%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 370 bps year over year to 16.2%. Adjusted general & administrative expenses decreased 420 bps to 4.6%.
Moreover, adjusted research & development expenses, as a percentage of revenues, decreased 750 bps year over year to 14.2%.
Non-GAAP operating expenses decreased 12.9% year over year to $634 million. Operating expenses, as a percentage of revenues, were 37% compared with the year-ago quarter’s figure of 53.3%.
Shopify’s adjusted operating income was $271 million against the year-ago quarter’s operating loss of $47 million.
Balance Sheet
As of Sep 30, 2023, Shopify had cash, cash equivalents and marketable securities balance of $4.92 billion compared with $4.8 billion as of Jun 30, 2023.
Free Cash Flow was $276 million compared with free cash flow of $97 million in the year-ago quarter.
Guidance
For the fourth quarter of 2023, Shopify expects revenue growth in the high teens on a year-over-year basis. Adjusting for a 400-500 bps headwind related to the divestiture of the logistics business, revenues are expected to grow in the low-to-mid-twenties on a year-over-year basis.
The gross margin is expected to be 46%, up 300 to 400 bps year over year. Gross margin is also expected to decline sequentially.
Operating expense is expected to decline low-single-digit sequentially.
For 2023, Shopify expects revenues to grow at a mid-twenties percentage rate on a year-over-year basis. Capital expenditure is expected to be roughly $45 million.
Zacks Rank & Stocks to Consider
Shopify currently carries a Zacks Rank #3 (Hold).
NetEase (NTES - Free Report) , NVIDIA (NVDA - Free Report) and Model N (MODN - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NetEase shares have gained 51.1% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
NVIDIA shares have returned 197.5% year to date. NVDA is set to report its third-quarter fiscal 2024 results on Nov 21.
Model N shares have declined 39.2% year to date. MODN is set to report its fourth-quarter fiscal 2023 results on Nov 9.
4 Oil Stocks with Massive Upsides
Global demand for oil is through the roof... and oil producers are struggling to keep up. So even though oil prices are well off their recent highs, you can expect big profits from the companies that supply the world with "black gold."
Zacks Investment Research has just released an urgent special report to help you bank on this trend.
In Oil Market on Fire, you'll discover 4 unexpected oil and gas stocks positioned for big gains in the coming weeks and months. You don't want to miss these recommendations.
Download your free report now to see them.
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