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Shopify (SHOP) Q1 Earnings Beat Estimates, Revenues Up Y/Y
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Shopify (SHOP - Free Report) reported first-quarter 2023 adjusted earnings of 1 cent per share, comfortably beating the Zacks Consensus Estimate of a loss of 4 cents but declining 50% year over year.
Total revenues increased 25.2% year over year to $1.51 billion, which beat the Zacks Consensus Estimate by 4.9%.
Quarter in Detail
Subscription Solutions revenues climbed 10.7% year over year to $382 million primarily due to more merchants joining the platform, as well as higher variable platform fees and apps.
Merchant Solutions revenues improved 31.1% year over year to $1.13 billion, driven by strong Gross Merchandise Volume (GMV), which improved 15% year over year to $49.57 billion.
As of Mar 31, 2023, Monthly Recurring Revenues (MRR) were $116 million, up 10% from the year-ago quarter. This growth benefited from more merchants joining the platform and an increase in the number of retail locations using POS Pro.
Shopify Plus revenues were $39 million, representing 34% of MRR compared with 30% in the year-ago quarter.
Gross Payments Volume grew to $27.52 billion, constituting 56% of GMV processed in the first quarter compared with $22 billion (51% of GMV) in the year-ago quarter.
Shopify Capital advanced $477 million in cash and loans to merchants, and had roughly $629 million outstanding as of Mar 31, 2023.
Operating Details
Non-GAAP gross profit increased 14.2% year over year to $738 million. However, the gross margin contracted 470 basis points (bps) year over year to 48.9%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 580 bps year over year to 17.9%. Adjusted general and administrative expenses decreased 40 bps to 7%.
However, adjusted research and development expenses, as a percentage of revenues, increased 520 bps year over year to 23.3%.
Non-GAAP operating expenses increased 25.2% year over year to $769 million. Operating expenses, as a percentage of revenues, were unchanged at 51%.
Shopify’s adjusted operating loss was $31 million against operating income of $32 million.
Balance Sheet
As of Mar 31, 2023, Shopify ended the reported quarter with cash, cash equivalents and marketable securities balance of $4.9 billion compared with $5.05 billion as of Dec 31, 2022.
The free cash flow was $86 million against a negative free cash flow of $41 million in the year-ago quarter.
Guidance
For the second quarter of 2023, Shopify expects revenue growth at a similar rate to the first quarter on a year-over-year basis.
The gross margin is expected to be similar to Shopify’s first-quarter 2023 gross margin.
Operating expenses are expected to decline by a mid-single-digit percentage on a sequential basis.
Shopify expects to achieve free cash flow profitability for each quarter of 2023 and capital expenditure of $100 million for the full year.
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Shopify shares have gained 65.1% year to date, outperforming the Zacks Computer & Technology sector’s growth of 18%.
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Shopify (SHOP) Q1 Earnings Beat Estimates, Revenues Up Y/Y
Shopify (SHOP - Free Report) reported first-quarter 2023 adjusted earnings of 1 cent per share, comfortably beating the Zacks Consensus Estimate of a loss of 4 cents but declining 50% year over year.
Total revenues increased 25.2% year over year to $1.51 billion, which beat the Zacks Consensus Estimate by 4.9%.
Quarter in Detail
Subscription Solutions revenues climbed 10.7% year over year to $382 million primarily due to more merchants joining the platform, as well as higher variable platform fees and apps.
Merchant Solutions revenues improved 31.1% year over year to $1.13 billion, driven by strong Gross Merchandise Volume (GMV), which improved 15% year over year to $49.57 billion.
Shopify Inc. Price, Consensus and EPS Surprise
Shopify Inc. price-consensus-eps-surprise-chart | Shopify Inc. Quote
As of Mar 31, 2023, Monthly Recurring Revenues (MRR) were $116 million, up 10% from the year-ago quarter. This growth benefited from more merchants joining the platform and an increase in the number of retail locations using POS Pro.
Shopify Plus revenues were $39 million, representing 34% of MRR compared with 30% in the year-ago quarter.
Gross Payments Volume grew to $27.52 billion, constituting 56% of GMV processed in the first quarter compared with $22 billion (51% of GMV) in the year-ago quarter.
Shopify Capital advanced $477 million in cash and loans to merchants, and had roughly $629 million outstanding as of Mar 31, 2023.
Operating Details
Non-GAAP gross profit increased 14.2% year over year to $738 million. However, the gross margin contracted 470 basis points (bps) year over year to 48.9%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 580 bps year over year to 17.9%. Adjusted general and administrative expenses decreased 40 bps to 7%.
However, adjusted research and development expenses, as a percentage of revenues, increased 520 bps year over year to 23.3%.
Non-GAAP operating expenses increased 25.2% year over year to $769 million. Operating expenses, as a percentage of revenues, were unchanged at 51%.
Shopify’s adjusted operating loss was $31 million against operating income of $32 million.
Balance Sheet
As of Mar 31, 2023, Shopify ended the reported quarter with cash, cash equivalents and marketable securities balance of $4.9 billion compared with $5.05 billion as of Dec 31, 2022.
The free cash flow was $86 million against a negative free cash flow of $41 million in the year-ago quarter.
Guidance
For the second quarter of 2023, Shopify expects revenue growth at a similar rate to the first quarter on a year-over-year basis.
The gross margin is expected to be similar to Shopify’s first-quarter 2023 gross margin.
Operating expenses are expected to decline by a mid-single-digit percentage on a sequential basis.
Shopify expects to achieve free cash flow profitability for each quarter of 2023 and capital expenditure of $100 million for the full year.
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Shopify shares have gained 65.1% year to date, outperforming the Zacks Computer & Technology sector’s growth of 18%.
Blink Charging (BLNK - Free Report) , Enfusion (ENFN - Free Report) and DigitalOcean (DOCN - Free Report) are some other top-ranked stocks that investors can consider in the Zacks Computer & Technology sector. Enfusion sports a Zacks Rank #1 (Strong Buy), and Blink and DigitalOcean carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Blink Charging shares have declined 27.9% year to date. BLNK is set to report its first-quarter 2023 results on May 9.
Enfusion shares have gained 24% year to date. ENFN is set to report its first-quarter 2023 results on May 9.
DigitalOcean shares have gained 23% year to date. DOCN is set to report its first-quarter 2023 results on May 9.