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Shopify (SHOP) to Report Q2 Earnings: What's in the Cards?

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Shopify Inc. (SHOP - Free Report) is scheduled to report second-quarter 2021 results on Jul 28.

The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $1.04 billion, suggesting growth of 46.3% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for earnings is pegged at 98 cents per share, indicating a year-over-year decline of 6.7%.

Shopify expects to benefit from the ongoing growth trends but has refrained from providing any guidance for the second quarter or 2021. This can be attributed to the pandemic-induced uncertainties prevailing in the market.

Management believes that the COVID-led spurt in e-commerce, and momentum in online retail spending seen in 2020 are likely to normalize in 2021 as gradual vaccine rollouts will enable the populace to move freely, boosting offline retail sales.

Shopify Inc. Price and EPS Surprise

 

Shopify Inc. Price and EPS Surprise

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

The company has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being a whopping 2,678.6%.

Factors to Note

Shopify’s performance is expected to have benefited from continued momentum in online sales triggered by the pandemic. The reimposition of lockdown across several parts of the world like India is expected to have resulted in higher uptake of its portfolio of solutions by merchants.

Strength in its Shopify Plus platform is expected to have aided the top-line performance in the to-be-reported quarter. Steady traction witnessed for Shop — a shopping assistant app — with an aim to aid merchants in enhancing customer experience and sales on the platform is expected to have boosted sales. In the last reported quarter, Shopify’s Shop app had more than 107 million registered users.

Momentum in the company’s new point of sale software Shopify POS PRO as well as Retail POS PRO solution is likely to drive its Monthly Recurring Revenue (MRR) metric.

Healthy uptake of Shopify’s merchant-friendly applications like Shopify Payments, Shopify Capital and Shopify Shipping solutions is expected to get reflected in the to-be-reported quarter’s results.

Adoption of solutions like Shopify Balance and Shop Pay Installments, which are aimed at enabling merchants to offer smooth payment options to customers, is expected to have positively impacted second-quarter performance.

Incremental adoption of the company’s wide-ranging solutions is likely to have aided merchants in expanding businesses with engaging experiences. This is expected to have favored the second-quarter performance and helped the company expand its merchant base.

An increase in the number of merchants on the platform is likely to have strengthened gross margin value and MRR metrics. It is also likely to have boosted revenues from Merchant Solutions and Subscription Solutions.

The Zacks Consensus Estimate for second-quarter revenues from Merchant Solutions stands at $717 million, representing an increase of 38.4% on a year-over-year basis. The consensus estimate for Subscription Solutions’ second-quarter revenues is pegged at $327 million, indicating a 66.8% rise on a year-over-year basis.

Net new merchants are expected to have improved through Shopify’s collaborations with Facebook (FB - Free Report) , Pinterest (PINS - Free Report) and Walmart.

Nevertheless, Shopify’s escalating investments in product development, fulfillment network, infrastructure and international expansion to maintain a competitive edge in the e-commerce market against players like BigCommerce Holdings, Inc. (BIGC - Free Report) are expected to have weighed on the second-quarter profitability.

At present, Shopify sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


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