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E-commerce Boom to Drive Shopify's (SHOP) First-Quarter Results

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Shopify (SHOP - Free Report) is expected to have benefited from the digital commerce revolution, which accelerated due to the coronavirus pandemic.

Increased online consumer spending is expected to have aided Shopify’s first-quarter results.

Accelerated adoption of Shopify products such as Shop Pay, Shop Pay Installments and Shopify Balance is likely to have driven the company’s top line in the to-be-reported quarter.

The company is slated to report first-quarter results on May 5.

Click here to know how Shopify’s overall first-quarter results are likely to be.

Shopify Inc. Price and EPS Surprise

 

Shopify Inc. Price and EPS Surprise

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

 

Aggravated Focus on E-Commerce To Boost Prospects

Increased focus on expanding its merchant base to encash the e-commerce boom is anticipated to have boosted the company’s first quarter 2022 performance. In the fourth quarter of 2021, the company reported that there are more than 14,000 merchants on Shopify Plus, with approximately 4,000 of these coming on in 2021. The company’s merchant GMV reached $175 million in 2021, up 47% year over year.

In the last reported quarter, Gross Merchandise Volume (GMV) rose 51% year over year, reaching $54.1 billion. The trend is likely to have continued in the to-be-reported quarter.

Shopify has been zeroing in on expanding its global reach as international customers bring in a lot of traffic to the merchant stores. In the first quarter, Shopify rolled out new features like Shopify Markets. This is expected to have driven merchant solutions revenue growth in the to-be-reported quarter.

Shopify’s rich partner ecosystem might have also acted as a growth driver in the to-be-reported quarter. Shopify has been banking on its new ERP program with ERP heavyweights such as Microsoft (MSFT - Free Report) , Oracle (ORCL - Free Report) , NetSuite and others.

Shopify has partnered with Microsoft and Oracle to integrate their ERP program into the Shopify app store. These integrations will enable merchants to seamlessly connect their workflows and also provide greater data control for high-volume merchants.

Such Shopify launches are expected to have aided merchants on the platforms to strengthen customer engagement in the first quarter.

In the last reported quarter, gross payment volume (GPV) reached $27.7 million, compared to $19.1 million in the year-ago quarter.

The Zacks Consensus Estimate for Revenues: Merchant Solutions stands at $23.3 million, indicating 34.7% growth from the figure reported in the year-ago quarter.

The gross payment volume (GPV) in the to-be-reported quarter is expected to have been driven by a strong performance by merchants on Shopify Payments, new merchant adoption, Shop Pay penetration gains and significant expanded payment penetration by merchants.

When mobile devices, social media and data analytics have been actively transforming the e-commerce marketplace, Shopify’s cloud-based platform has been able to provide solutions catering to the growing needs of merchants.

In the to-be-reported quarter, Shopify has expanded its accelerated checkout Shop Pay to Shopify and non-Shopify merchants on Facebook and Instagram and completed the integration of Shopify Payments with Google’s (GOOGL - Free Report) Buy on Google. This allows customers to purchase products from Shopify merchants and checkout directly on Google. The introduction of Shop Pay outside of Shopify enables merchants to offer fast and frictionless checkout to their customers on these surfaces, in turn, helping to increase sales conversion

The Zacks Consensus Estimate for Merchant Solutions revenues stands at $884 million, indicating 31.4% growth from the year-ago quarter.

Subscription Solutions market growth in the to-be-reported quarter is expected to have been driven by more global merchants joining Shopify, aggressive investments in sales and marketing and the introduction of new commercial initiatives.

The consensus mark for Subscription Solutions revenues is pegged at $364 million, suggesting 13.4% growth from the year-ago quarter.

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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