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The e-commerce software providerShopify (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%.
Shares of Shopify still dropped more than 5% (reflecting the earnings results) in the key trading session on Aug 3 as investor concerns about long-term growth overshadowed the Canadian e-commerce platform’s outlook for the current quarter, per Bloomberg.
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.
Guidance Needs a Clear Roadmap
For the third quarter of 2023, Shopify expects revenue growth at a low-twenties percentage rate on a year-over-year basis (ahead of consensus estimate of 17.38%). Analysts at Morgan Stanley wrote in a note that investors “still lack any road map” on future growth after the earnings call, as quoted on the Bloomberg article.
Time to Buy the Dip With ETFs?
Investors should note that 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. The company is expanding its shipping business and global merchant base. The cost-to-value ratio has led the company to see more merchants drift to Shopify, per the management.
Shopify stock currently has a Zacks Rank #2 (Buy). Though the stock has moderate Growth Score of “C”, its Value and Momentum scores are downbeat at “F.” Hence, tapping the stock through the ETF approach should minimize some stock-specific risks.
Image: Bigstock
Time to Buy the Dip in Shopify Through ETFs?
The e-commerce software providerShopify (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%.
Shares of Shopify still dropped more than 5% (reflecting the earnings results) in the key trading session on Aug 3 as investor concerns about long-term growth overshadowed the Canadian e-commerce platform’s outlook for the current quarter, per Bloomberg.
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.
Guidance Needs a Clear Roadmap
For the third quarter of 2023, Shopify expects revenue growth at a low-twenties percentage rate on a year-over-year basis (ahead of consensus estimate of 17.38%). Analysts at Morgan Stanley wrote in a note that investors “still lack any road map” on future growth after the earnings call, as quoted on the Bloomberg article.
Time to Buy the Dip With ETFs?
Investors should note that 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. The company is expanding its shipping business and global merchant base. The cost-to-value ratio has led the company to see more merchants drift to Shopify, per the management.
Shopify stock currently has a Zacks Rank #2 (Buy). Though the stock has moderate Growth Score of “C”, its Value and Momentum scores are downbeat at “F.” Hence, tapping the stock through the ETF approach should minimize some stock-specific risks.
Shopify-Heavy ETFs in Focus
ARK Fintech Innovation ETF (ARKF - Free Report) – Shopify has 9.78% Weight
Bitwise Web3 ETF (BWEB - Free Report) – Shopify has 7.55% Weight
First Trust Dow Jones International Internet ETF (FDNI - Free Report) – Shopify has 7.41% Exposure
Franklin Disruptive Commerce ETF (BUYZ - Free Report) – Shopify has 6.67% Exposure
Global X E-commerce ETF (EBIZ - Free Report) – Shopify has 6.45% Exposure