Services

How Shopify Surprised Investors Again

Shopify Inc. (NYSE: SHOP) reported first-quarter 2020 results before markets opened Wednesday. The e-commerce platform provider posted adjusted earnings per share (EPS) of $0.19 on revenues of $470.0 million. In the same period a year ago, the company reported EPS of $0.06 on revenues of $320.5 million. First-quarter results also compare to the consensus estimates for loss per share of $0.18 and $443.1 million in revenues.

On a GAAP basis, Shopify posted a net loss per share of $0.27, compared to a year-ago loss per share of $0.22. Total revenue rose 47% year over year, and gross merchandise value for the quarter totaled $17.4 billion, up by $5.5 billion (46%) year over year.

Adjusted gross profit rose by 44% to $263.8 million in the first quarter, compared with $182.7 million for the first quarter of 2019, and adjusted net income totaled $22.3 million, compared with $7.1 million a year ago. Shopify excludes stock-based compensation and amortization of acquired intangibles plus related taxes from its adjusted results.

Shopify CEO Tobi Lütke commented:

The vast majority of people are employed by small businesses, and they struggle the most during a crisis. The spread of COVID-19 is going to be a tough time for all entrepreneurs. We are working as fast as we can to support our merchants by re-tooling our products to help them adapt to this new reality. Our goal is that, because Shopify exists, more entrepreneurs and small businesses will get through this.

CFO Amy Shapero added:

We are well positioned to help our merchants, particularly given the accelerated shift to online commerce. Our strong balance sheet provides us with the flexibility to continue investing in the right merchant-first initiatives, supporting our merchants’ success now and well into the future.

Shopify reported $2.4 billion in cash and marketable securities and no debt at the end of the quarter.

The stay-at-home orders resulting from the coronavirus pandemic had a significant impact on the company’s gross merchandise value. Between March 13 and April 24, Shopify estimates that first-time customers at its merchants’ stores rose by 8%.

The company has suspended its financial expectations for the 2020 fiscal year due to the COVID-19 outbreak. Shopify did say that it is “redirecting spend from certain areas, such as brand and marketing, to product initiatives that directly support our merchants’ ability to adapt to an emerging environment, one where we believe multi-channel selling and direct-to-consumer fulfillment are more important than ever.”

Analysts are expecting a second-quarter loss per share of $0.09 on sales of $432.5 million. For the full year, consensus estimates call for a loss per share of $0.09 on sales of $2.0 billion.

Shopify stock traded up about 0.4% in Wednesday’s premarket session, at $690.54 in a 52-week range of $242.23 to $704.69. The high was posted on Tuesday. The 12-month consensus price target on the stock is $512.55.