How Shopify Knocked Earnings Out of the Park Again
Shopify reported better than expected third-quarter results before the opening bell on Thursday, and yet shares were down shortly after the opening bell.
Shopify Inc. (NYSE: SHOP | SHOP Price Prediction) reported its most recent quarterly results before the opening bell on Wednesday. The up-and-coming e-commerce company posted $1.13 in earnings per share (EPS) and $767.4 million in revenue, better than consensus estimates that called for $0.53 in EPS and revenue of $663.4 million. The third quarter of last year reportedly had a net loss of $0.29 per share on $390.55 million in revenue.
During the latest quarter, Subscription Solutions revenue grew 48% to $245.3 million. This increase was driven primarily by an increase in the number of merchants joining the Shopify platform.
Merchant Solutions revenue grew 148%, to $517.9 million, driven primarily by the growth of gross merchandise volume (GMV).
As of September 30, monthly recurring revenue (MRR) increased 47% year over year to $74.4 million, up from $50.7 million at the end of September 2019. Shopify Plus contributed $18.7 million, or 25%, of MRR.
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GMV for the third quarter was $30.9 billion, an increase of $16.1 billion, or 109%, over the third quarter of 2019. Gross payments volume grew to $14.0 billion, which accounted for 45% of GMV processed in the quarter, versus $6.2 billion, or 42%, for the third quarter of 2019.
Cash, cash equivalents and marketable securities totaled $6.12 billion at the end of the quarter, up from $2.46 billion at the end of the previous fiscal year.
Shopify did not provide any guidance for the fourth quarter. However, the company did note that the COVID-19 pandemic has accelerated the growth of e-commerce, shifting a larger share of retail spending to online commerce. Analysts are calling for $0.71 in EPS and $788.99 million in revenue for the quarter.
Shopify stock traded down 2.1% to $1,005.26 early Thursday, in a 52-week range of $282.08 to $1,146.91. The consensus price target is $1,113.68.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
