Shopify (SHOP.US) stock is gaining almost 24% after the earnings report which exceeded analyst expectations. Revenue reached $2.16 billion, a 26% year-over-year increase, beating the $2.12 billion consensus estimate. Key drivers included strong merchant solutions and subscription revenues, with gross merchandise volume (GMV) surpassing forecasts at $69.72 billion. Analysts highlighted Shopify's free cash flow margins, which rose to 19%, indicating robust cost control and a balanced growth approach.
- Revenue: $2.16 billion (26% year-over-year increase; above the $2.12 billion consensus estimate)
- Gross Merchandise Volume (GMV): $69.72 billion (up from $56.21 billion; ahead of the $68.12 billion consensus estimate)
- Merchant Solutions Revenue: $1.55 billion (26% year-over-year increase; above $1.52 billion estimate)
- Subscription Revenue: $610 million (26% year-over-year increase; above $599 million estimate)
- Monthly Recurring Revenue (MRR): $175 million (slightly above the $173.6 million estimate)
- Net Income: $828 million (up from $718 million in the prior year)
- Adjusted Net Income: $344 million (approximately double year-over-year)
- Free Cash Flow: $421 million (up from $276 million; well above the $345 million estimate)
- Free Cash Flow Margin: 19% (up from 16% year-over-year)
Management's outlook for the fourth quarter was optimistic, projecting revenue growth in the mid- to high-20% range and free cash flow margins consistent with Q3. Executives emphasized a disciplined strategy blending growth investments and operational leverage. Shopify expects gross profit growth to mirror Q3’s pace, with operating expenses as a percentage of revenue landing between 32% and 33%. This guidance suggests continued strong performance through year-end, underpinned by international expansion and improving product offerings.
Market reactions to the report reflected optimism about Shopify's ability to scale profitably. The company recorded net income of $828 million, with adjusted figures showing a doubling in earnings year-over-year.
Source: xStation 5
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