We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shopify (SHOP) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Read MoreHide Full Article
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.