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Shopify (SHOP) Q2 Earnings Beat Estimates, Revenues Up Y/Y
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Shopify (SHOP - Free Report) reported second-quarter 2023 adjusted earnings of 14 cents per share, comfortably beating the Zacks Consensus Estimate of 6 cents. The company reported a loss of 3 cents per share in the year-ago quarter.
Total revenues jumped 30.8% year over year to $1.69 billion, which beat the Zacks Consensus Estimate by 4.13%.
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 21.3% year over year to $444 million, primarily due to more merchants joining the platform, as well as pricing changes that came into effect for existing merchants in April.
Merchant Solutions revenues improved 34.6% year over year to $1.25 billion, driven by strong Gross Merchandise Volume (GMV), which improved 17% year over year to $55 billion.
As of Jun 30, 2023, Monthly Recurring Revenues (MRR) were $139 million, up 30% from the year-ago quarter. The growth benefited from an increase in the number of Standard and Plus merchants and pricing changes for existing merchants in April, this year.
Shopify Plus revenues were $41 million, representing 29% of MRR compared with 31% in the year-ago quarter.
Gross Payments Volume grew to $31.7 billion, constituting 58% of GMV processed in the second quarter compared with $24.9 billion (53% of GMV) in the year-ago quarter.
Shopify Capital had roughly $719 million outstanding as of Jun 30, 2023.
Operating Details
Non-GAAP gross profit increased 26.9% year over year to $844 million. However, the gross margin contracted 150 basis points (bps) year over year to 49.8%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 750 bps year over year to 16.5%. Adjusted general & administrative expenses decreased 270 bps to 5.5%.
Moreover, adjusted research & development expenses, as a percentage of revenues, decreased 180 bps year over year to 17.4%.
Non-GAAP operating expenses decreased 1.3% year over year to $698 million. Operating expenses, as a percentage of revenues, were 41.2% compared with the year-ago quarter’s figure of 54.6%.
Shopify’s adjusted operating income was $146 million against the year-ago quarter’s operating loss of $42 million.
Balance Sheet
As of Jun 30, 2023, Shopify had cash, cash equivalents and marketable securities balance of $4.8 billion compared with $4.9 billion as of Mar 31, 2023.
Free Cash Flow was $97 million compared with free cash flow of $86 million in the year-ago quarter.
Guidance
For the third quarter of 2023, Shopify expects revenue growth at a low-twenties percentage rate on a year-over-year basis. Adjusting for 300-400 bps headwind related to the divestiture of the logistics business, revenues are expected to grow in the mid-twenties on a year-over-year basis.
The gross margin is expected to be two to three percentage points higher than Shopify’s second-quarter 2023 gross margin.
Operating expense is expected to be flat to slightly up on a sequential basis.
Third-quarter free cash flow is expected to be greater than the entire first half of 2023.
For 2023, Shopify expects a capital expenditure of roughly $45 million.
Image: Bigstock
Shopify (SHOP) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Shopify (SHOP - Free Report) reported second-quarter 2023 adjusted earnings of 14 cents per share, comfortably beating the Zacks Consensus Estimate of 6 cents. The company reported a loss of 3 cents per share in the year-ago quarter.
Total revenues jumped 30.8% year over year to $1.69 billion, which beat the Zacks Consensus Estimate by 4.13%.
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 21.3% year over year to $444 million, primarily due to more merchants joining the platform, as well as pricing changes that came into effect for existing merchants in April.
Merchant Solutions revenues improved 34.6% year over year to $1.25 billion, driven by strong Gross Merchandise Volume (GMV), which improved 17% year over year to $55 billion.
Shopify Inc. Price, Consensus and EPS Surprise
Shopify Inc. price-consensus-eps-surprise-chart | Shopify Inc. Quote
As of Jun 30, 2023, Monthly Recurring Revenues (MRR) were $139 million, up 30% from the year-ago quarter. The growth benefited from an increase in the number of Standard and Plus merchants and pricing changes for existing merchants in April, this year.
Shopify Plus revenues were $41 million, representing 29% of MRR compared with 31% in the year-ago quarter.
Gross Payments Volume grew to $31.7 billion, constituting 58% of GMV processed in the second quarter compared with $24.9 billion (53% of GMV) in the year-ago quarter.
Shopify Capital had roughly $719 million outstanding as of Jun 30, 2023.
Operating Details
Non-GAAP gross profit increased 26.9% year over year to $844 million. However, the gross margin contracted 150 basis points (bps) year over year to 49.8%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 750 bps year over year to 16.5%. Adjusted general & administrative expenses decreased 270 bps to 5.5%.
Moreover, adjusted research & development expenses, as a percentage of revenues, decreased 180 bps year over year to 17.4%.
Non-GAAP operating expenses decreased 1.3% year over year to $698 million. Operating expenses, as a percentage of revenues, were 41.2% compared with the year-ago quarter’s figure of 54.6%.
Shopify’s adjusted operating income was $146 million against the year-ago quarter’s operating loss of $42 million.
Balance Sheet
As of Jun 30, 2023, Shopify had cash, cash equivalents and marketable securities balance of $4.8 billion compared with $4.9 billion as of Mar 31, 2023.
Free Cash Flow was $97 million compared with free cash flow of $86 million in the year-ago quarter.
Guidance
For the third quarter of 2023, Shopify expects revenue growth at a low-twenties percentage rate on a year-over-year basis. Adjusting for 300-400 bps headwind related to the divestiture of the logistics business, revenues are expected to grow in the mid-twenties on a year-over-year basis.
The gross margin is expected to be two to three percentage points higher than Shopify’s second-quarter 2023 gross margin.
Operating expense is expected to be flat to slightly up on a sequential basis.
Third-quarter free cash flow is expected to be greater than the entire first half of 2023.
For 2023, Shopify expects a capital expenditure of roughly $45 million.
Zacks Rank & Other Stocks to Consider
Shopify currently carries a Zacks Rank #2 (Buy).
BILL Holdings (BILL - Free Report) , CACI International (CACI - Free Report) and Cisco Systems (CSCO - Free Report) are some other top-ranked stocks that investors can consider in the broader sector, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BILL Holdings shares have gained 7.8% year to date. BILL is set to report its fourth-quarter fiscal 2023 results on Aug 17.
CACI International shares have gained 18% year to date. CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9.
Cisco Systems shares have returned 10.4% year to date. CSCO is set to report its fourth-quarter fiscal 2023 results on Aug 16.