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Shopify (SHOP) to Report Q1 Earnings: What Awaits the Stock?

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Shopify Inc. (SHOP - Free Report) is slated to report first-quarter 2021 results on Apr 28.

Although the company expects to gain from ongoing growth trends, it refrained from providing any formal guidance for the first quarter or 2021, which can be attributed to COVID-19 induced uncertainties prevailing in the market pertaining to unemployment, fiscal stimulus, and the magnitude and duration of adverse business impacts.

Management believes that coronavirus crisis led e-commerce boom, and momentum in online retail spending in 2020 are likely to normalize in 2021 as vaccine roll outs will enable population to move freely, encouraging offline retail sales.

Nevertheless, momentum in Shopify Payments, Shopify Shipping, and Shopify Capital, and growing clout of newer solutions such as Shopify Fulfillment Network are expected to have contributed to revenue growth in the first quarter.

The Zacks Consensus Estimate for revenues is currently pegged at $853.04 million, suggesting growth of 81.5% from the year-ago quarter.

Meanwhile, the Zacks Consensus Estimate for earnings is pegged at 77 cents per share, which was revised upward by 1 cent in the past seven days, indicating growth of 305.3% over the prior-year quarter.

Shopify Inc. Price and EPS Surprise

Shopify Inc. Price and EPS Surprise

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

Notably, the company has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being a whopping 2,690.54%.

Factors to Note

Shopify’s first-quarter performance is expected to have benefited from ongoing momentum in online sales triggered by the coronavirus pandemic amid e-commerce boom.

Moreover, traction in latest Shop — a shopping assistant app — with an aim to aid merchants enhance customer experience and sales on the platform might have bolstered sales.

Solid uptick in contactless payment hardware for Canadian retailers using new point of sale (POS) system, Shopify POS, is anticipated to get reflected in the company’s first-quarter results. This includes the Shopify Tap & Chip Card Reader, Shopify Tap & Chip Case and Shopify Retail Kit.

Further, growing clout of the company’s latest POS system to help integrate online and in-person sales in a bid to aid merchants to stay abreast of evolving commerce practices in the wake of tough retail environment is noteworthy.

Notably, incremental adoption of these aforementioned new services is likely to have aided merchants in expanding business with engaging experience. This might have favored the first-quarter performance and helped the company expand merchant base.

Besides, robust adoption of Shopify’s easy-to-use upgrades and new merchant-friendly applications is anticipated to have bolstered adoption of Shopify Payments, Shopify Capital and Shopify Shipping solutions in the first quarter. This, in turn, may get reflected in the to-be-reported quarter’s results.

Markedly, an expanding merchant base has been instilling confidence in this Zacks Rank #3 (Hold) stock. Shares of Shopify have returned 70.5% in the past year, compared with the industry’s rally of 66%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Also, roll out of new solutions like Shopify Balance and Shop Pay Installments, which are aimed at enabling merchants to offer seamless payment options to customers, is expected to get reflected in the first-quarter results.

Incidentally, net new merchants are expected to have improved via Shopify’s partnerships with Facebook (FB - Free Report) and Walmart (WMT - Free Report) .

Notably, Shopify has been working on extending language capabilities beyond English. The focus on local languages might have helped the company in strengthening international foothold. These initiatives to reinforce presence in the international market may have driven the first-quarter performance.

In addition, with an aim to acquire more Plus and POS merchants both in North America and internationally on increased global demand, the company intends to expand sales and marketing efforts, and improve product marketing to help merchants leverage the comprehensive range of capabilities on the Shopify platform.

Consequently, Shopify’s increasing investments on product development, fulfillment network, infrastructure and international expansion to maintain competitive position in the e-commerce market against players like BigCommerce Holdings, Inc. (BIGC - Free Report) , are likely to have weighed on the first-quarter profitability.

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