After Q4 Earnings Can Shopify Be Stopped?

When Shopify Inc. (NYSE: SHOP) released its fourth-quarter financial results before the markets opened on Wednesday, the Canadian e-commerce firm said that it had $0.43 in earnings per share (EPS) and $505.2 million in revenue. That compared with consensus estimates of $0.24 in EPS and $482.05 million in revenue, as well as the $0.27 per share and $343.86 million posted in the same period of last year.

During the latest quarter, Subscription Solutions revenue grew 37% to $183.2 million. This increase was driven primarily by growth in monthly recurring revenue, largely as a result of an increase in the number of merchants joining the Shopify platform.

Merchant Solutions revenue grew 53%, to $322.0 million, driven primarily by the growth of gross merchandise volume (GMV).

GMV for the fourth quarter was $20.6 billion, an increase of $6.6 billion, or 47%, over the fourth quarter of 2018. Gross payments volume grew to $8.9 billion, which accounted for a record 43% of GMV processed in the quarter, versus $5.8 billion, or 41%, for the fourth quarter of 2018.

Looking ahead to the fiscal first quarter, the company expects to see revenues in the range of $440 million to $446 million and an adjusted operating loss of $30 million to $34 million. The consensus estimates are calling for $0.12 in EPS and $444.5 million in revenue for the quarter.

Amy Shapero, Shopify’s chief financial officer, commented:

Shopify’s merchants had a tremendous fourth quarter, powered by our ongoing efforts to help them sell more and manage their businesses more effectively. Our investments to enhance our product offerings and expand internationally are attracting entrepreneurs worldwide and helping them succeed, as demonstrated by strong GMV growth in 2019. In 2020, we will continue to invest in our portfolio of growth initiatives to better serve merchants and energize the flywheel well into the future.

Shopify stock traded up about 13% at $555.23 on Wednesday, in a 52-week range of $169.56 to $593.89. The consensus price target is $411.46.