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Shopify (SHOP - Free Report) reported fourth-quarter 2023 adjusted earnings of 34 cents per share, comfortably beating the Zacks Consensus Estimate by 9.68%. The company reported earnings of 7 cents per share in the year-ago quarter.
Total revenues jumped 23.6% year over year to $2.14 billion, which beat the Zacks Consensus Estimate by 3.66%.
Quarter in Detail
Subscription Solutions revenues increased 31.3% year over year to $525 million primarily due to more merchants joining the platform, as well as pricing changes for existing merchants on its Standard subscription plans.
Merchant Solutions revenues improved 21.3% year over year to $1.62 billion, driven by robust Gross Merchandise Volume (GMV), which improved 23% year over year to $75.1 billion.
As of Dec 31, 2023, Monthly Recurring Revenues (MRR) were $149 million, up 35% from the year-ago quarter. Shopify Plus revenues were $46 million, representing 31% of MRR compared with 33% in the year-ago quarter.
Gross Payments Volume grew to $45.1 billion, constituting 60% of GMV processed in the fourth quarter compared with $34.2 billion (56% of GMV) in the year-ago quarter.
Operating Details
Non-GAAP gross profit increased 30.1% year over year to $1.07 billion. The gross margin expanded 250 basis points (bps) year over year to 49.8%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 210 bps year over year to 14.1%. Adjusted general and administrative expenses decreased 230 bps to 3.8%.
Moreover, adjusted research and development expenses, as a percentage of revenues, decreased 810 bps year over year to 11.3%.
Non-GAAP operating expenses decreased 11.4% year over year to $671 million. Operating expenses, as a percentage of revenues, were 31.3% compared with the year-ago quarter’s 43.6%.
Shopify’s adjusted operating income was $396 million compared with the year-ago quarter’s $63 million.
Balance Sheet
As of Dec 31, 2023, Shopify had cash, cash equivalents and marketable securities balance of $5 billion compared with $4.92 billion as of Sep 30, 2023.
The free cash flow was $446 million compared with $276 million in the year-ago quarter.
Guidance
For the first quarter of 2024, Shopify expects revenue growth in the low-twenties on a year-over-year basis. Adjusting for a 500-600 bps headwind related to the divestiture of the logistics business, revenues are expected to grow in the mid to high-twenties on a year-over-year basis.
The gross margin is expected to increase 150 bps sequentially.
Operating expenses are expected to increase at the low-teens percentage rate sequentially.
Zacks Rank & Other Stocks to Consider
Shopify currently carries a Zacks Rank #2 (Buy).
Shopify shares have declined 0.9% year to date, outperforming the Zacks Computer & Technology sector’s growth of 6.4%.
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Shopify (SHOP) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Shopify (SHOP - Free Report) reported fourth-quarter 2023 adjusted earnings of 34 cents per share, comfortably beating the Zacks Consensus Estimate by 9.68%. The company reported earnings of 7 cents per share in the year-ago quarter.
Total revenues jumped 23.6% year over year to $2.14 billion, which beat the Zacks Consensus Estimate by 3.66%.
Quarter in Detail
Subscription Solutions revenues increased 31.3% year over year to $525 million primarily due to more merchants joining the platform, as well as pricing changes for existing merchants on its Standard subscription plans.
Merchant Solutions revenues improved 21.3% year over year to $1.62 billion, driven by robust Gross Merchandise Volume (GMV), which improved 23% year over year to $75.1 billion.
Shopify Inc. Price, Consensus and EPS Surprise
Shopify Inc. price-consensus-eps-surprise-chart | Shopify Inc. Quote
As of Dec 31, 2023, Monthly Recurring Revenues (MRR) were $149 million, up 35% from the year-ago quarter. Shopify Plus revenues were $46 million, representing 31% of MRR compared with 33% in the year-ago quarter.
Gross Payments Volume grew to $45.1 billion, constituting 60% of GMV processed in the fourth quarter compared with $34.2 billion (56% of GMV) in the year-ago quarter.
Operating Details
Non-GAAP gross profit increased 30.1% year over year to $1.07 billion. The gross margin expanded 250 basis points (bps) year over year to 49.8%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 210 bps year over year to 14.1%. Adjusted general and administrative expenses decreased 230 bps to 3.8%.
Moreover, adjusted research and development expenses, as a percentage of revenues, decreased 810 bps year over year to 11.3%.
Non-GAAP operating expenses decreased 11.4% year over year to $671 million. Operating expenses, as a percentage of revenues, were 31.3% compared with the year-ago quarter’s 43.6%.
Shopify’s adjusted operating income was $396 million compared with the year-ago quarter’s $63 million.
Balance Sheet
As of Dec 31, 2023, Shopify had cash, cash equivalents and marketable securities balance of $5 billion compared with $4.92 billion as of Sep 30, 2023.
The free cash flow was $446 million compared with $276 million in the year-ago quarter.
Guidance
For the first quarter of 2024, Shopify expects revenue growth in the low-twenties on a year-over-year basis. Adjusting for a 500-600 bps headwind related to the divestiture of the logistics business, revenues are expected to grow in the mid to high-twenties on a year-over-year basis.
The gross margin is expected to increase 150 bps sequentially.
Operating expenses are expected to increase at the low-teens percentage rate sequentially.
Zacks Rank & Other Stocks to Consider
Shopify currently carries a Zacks Rank #2 (Buy).
Shopify shares have declined 0.9% year to date, outperforming the Zacks Computer & Technology sector’s growth of 6.4%.
Dell Technologies (DELL - Free Report) , Itron (ITRI - Free Report) and CrowdStrike (CRWD - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dell Technologies shares have gained 9.8% year to date. DELL is set to report its fourth-quarter fiscal 2024 results on Feb 29.
Itron shares have declined 4.1% year to date. ITRI is set to report its fourth-quarter 2023 results on Feb 26.
CrowdStrike shares have jumped 26.3% year to date. CRWD is set to report its fourth-quarter fiscal 2024 results on Mar 5.