Back to top

Analyst Blog

Zacks Equity Research

Shopify's (SHOP) Plus to Benefit from Boltmade Acquisition


Trades from $3

Shopify Inc. (SHOP - Snapshot Report) recently reinforced its software development team through the acquisition of Boltmade. Based in Waterloo, Ontario, the product design and development consultancy boasts a healthy clientele that includes start-ups as well as Fortune 500 companies.

Post acquisition, all 21 employees of Boltmade will be retained by Shopify, which will increase its workforce to 130. The takeover will help the cloud-based multi-channel commerce platform to rapidly develop its Shopify Plus product offering in the near term.

While the legacy Shopify platform caters to small and medium-sized businesses, Shopify Plus is primarily intended for large retailers. The higher-priced product line caters to merchants with higher-volume sales and offers additional functionality, scalability and support requirements.

Shopify Plus Grows on Merchant Expansion

Shopify Plus had more than 1000 merchants at the end of 2015. The addition of Boltmade is expected to improve the features of Shopify Plus. This will further attract new merchants. We believe the addition of brands like Boeing, Bose and Hallmark will drive gross merchandise value (GMV) going ahead.

Notably, almost half of the new Shopify Plus merchants in the second quarter 2016 were clients that upgraded from lower price lines. This significantly drove the subscription revenue per merchant in the quarter. We believe the expanding Shopify Plus merchant base will drive the company’s top-line growth in the long haul.

SHOPIFY INC Price and Consensus


SHOPIFY INC Price and Consensus | SHOPIFY INC Quote

Expanding Partner ecosystem Key Catalyst

Moreover, Shopify’s expanding partner ecosystem which now includes the likes of Facebook (FB - Analyst Report) , Amazon (AMZN - Analyst Report) and Pinterest is expected to boost the merchant number significantly by the end of 2016.

Integration with Facebook messenger has already seen one million conversations between Shopify’s merchants and customers. The company’s first integrated marketplace – Amazon – is expected to be available by the end of 2016.

Additionally, Shopify anticipates addition of Apple and Android Pay to improve mobile conversion rates. As time spent on mobile phones is increasing, the availability of Apple and Android Pay will definitely increase sales for merchants across the platform.

Zacks Rank & Key Picks

Shopify has a Zacks Rank #3 (Hold). Yirendai Ltd. (YRD - Snapshot Report) is better-ranked stock with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  Yirendai’s current year estimates have increased 44 cents to $1.75 over the last 60 days.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>