Sources / Facts
1: The major points of the earnings release were positive. Shopify earned $0.20 in adjusted earnings per share (EPS) in the first quarter on sales of $1.86 billion. That profit figure beat consensus by 3 cents per share. Revenue rose 23% YoY, beating the Wall Street consensus by $10 million. View Source2: However, investors drew ire from Shopify’s $-0.21 GAAP loss, which underperformed the $0.05 GAAP profit produced a year earlier. Management blamed higher marketing expenses and rising costs for its merchant and subscription units. Wall Street analysts had been expecting $0.08 in GAAP EPS. View Source3: The eCommerce solution has traded down more than 20% on Wednesday morning as the broader market tumbles in tandem. Both the S&P 500 and NASDAQ are down more than 0.3% at the time of writing. View Source4: The eCommerce solution has traded down more than 20% on Wednesday morning as the broader market tumbles in tandem. Both the S&P 500 and NASDAQ are down more than 0.3% at the time of writing. View Source5: Nasdaq composite today: The index is down by 0.18% View Source6: Nasdaq composite today: The index is down by 0.18% View Source7: "Shopify Inc. (NYSE:SHOP): Shopify shares were our top performer in the quarter following a strong 3Q earnings report that included better than expected revenue growth and substantial margin expansion. We wrote in October, after Shopify was our worst performer, that the stock had been volatile, despite the fact that the company’s underlying business has been “steadily improving following a post-Covid e-Commerce slowdown.” The most recent quarter, reported in early November, was a continuation of this steady recovery. Revenue growth of 25% was 3 percentage points better than investors expected and an acceleration over last year’s 3Q growth of 22%. More impressively, SHOP reported operating income margins of 16%, 600 basis points ahead of investor expectations. Free cash flow margins were also 16%, and the company guided 4Q free cash flow margins to the “high teens.” A combination of new merchants to the company’s platform, increased adoption of SHOP’s offerings by existing merchants, and e-commerce market share gains (SHOP merchants US sales on Black Friday grew 24% year over year vs US E-commerce in aggregate growing 7.5%) are driving this revenue growth and profitability. View Source8: Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation." View Source9: Shopify has been touting its "new shape" since it sold its logistics business and laid off 20% of its workforce in May 2023. The company had about 8,300 employees at the end of 2023, according to filings with the SEC, and efficiency has been a major focus. For instance, it built an internal software called Shopify OS that takes in data about the business and makes recommendations about the resources and skills that will be needed to complete a project. View Source10: "Shopify's core business remains strong, and its moat is well intact, but questions surrounding its profitability trajectory and its high growth status present a new challenge they must navigate," Third Bridge analyst Charlie Miner said. "Despite a strong Q1 report, the forecast for margin contraction and lighter-than-expected Q2 revenue is sounding the alarm bell for investors." View Source11: "Shopify's core business remains strong, and its moat is well intact, but questions surrounding its profitability trajectory and its high growth status present a new challenge they must navigate," Third Bridge analyst Charlie Miner said. "Despite a strong Q1 report, the forecast for margin contraction and lighter-than-expected Q2 revenue is sounding the alarm bell for investors." View Source12: **↘️** **Uber Technologies (UBER)**: The ride-hailing company swung to a surprise loss last quarter. Its shares, which were up ahead of the earnings, fell more than 7% in morning trading. **↘️** **Shopify (SHOP**, **CA:SHOP)**: The e-commerce platform's shares tumbled 20% after it forecast a slowdown in revenue growth. View Source13: Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation." View Source14: Shopify is scalable, too. You can add features and functionality as your business grows, thanks to the platform's app store. Looking to feature customer reviews, or generate custom reports to monitor your analytics? With Shopify, there's an app, or a plug-in, for that. And with secure site hosting and payment processing, Shopify takes practically all the logistical headaches out of managing your online store. View Source