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Shopify (SHOP) Up 12.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Shopify (SHOP - Free Report) . Shares have added about 12.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Shopify due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Shopify Q2 Earnings Beat Estimates, Revenues Up Y/Y
Shopify 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%.
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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Shopify has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Shopify has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Shopify is part of the Zacks Internet - Services industry. Over the past month, Alphabet (GOOGL - Free Report) , a stock from the same industry, has gained 6%. The company reported its results for the quarter ended June 2023 more than a month ago.
Alphabet reported revenues of $62.07 billion in the last reported quarter, representing a year-over-year change of +8%. EPS of $1.44 for the same period compares with $1.21 a year ago.
For the current quarter, Alphabet is expected to post earnings of $1.45 per share, indicating a change of +36.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Alphabet. Also, the stock has a VGM Score of B.
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Shopify (SHOP) Up 12.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Shopify (SHOP - Free Report) . Shares have added about 12.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Shopify due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Shopify Q2 Earnings Beat Estimates, Revenues Up Y/Y
Shopify 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%.
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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Shopify has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Shopify has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Shopify is part of the Zacks Internet - Services industry. Over the past month, Alphabet (GOOGL - Free Report) , a stock from the same industry, has gained 6%. The company reported its results for the quarter ended June 2023 more than a month ago.
Alphabet reported revenues of $62.07 billion in the last reported quarter, representing a year-over-year change of +8%. EPS of $1.44 for the same period compares with $1.21 a year ago.
For the current quarter, Alphabet is expected to post earnings of $1.45 per share, indicating a change of +36.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Alphabet. Also, the stock has a VGM Score of B.