It has been about a month since the last earnings report for Shopify. Shares have lost about 0.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Shopify due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Shopify Q4 Earnings Beat Estimates, Revenues Up Y/Y
Shopify reported fourth-quarter 2022 adjusted earnings of 7 cents per share, comfortably beating the Estimate of breakeven but declining 50% year over year.
Total revenues increased 25.7% year over year to $1.74 billion, which beat the Estimate by 5.57%.
Quarter in Detail
Subscription Solutions revenues climbed 14% year over year to $400.3 million primarily due to more merchants joining the platform, as well as higher variable platform fees and apps.
Merchant Solutions revenues improved 29.7% year over year to $1.33 billion, driven by strong Gross Merchandise Volume (GMV), which improved 13% year over year to $61 billion.
As of Dec 31, 2022, Monthly Recurring Revenues (MRR) were $109.5 million, up 7% from the year-ago quarter. Growth benefited from more merchants joining the platform and an increase in the number of retail locations using POS Pro.
Shopify Plus revenues were $36.6 million, representing 33% of MRR compared with 29% reported in the year-ago quarter.
Gross Payments Volume grew to $34.2 billion, constituting 56% of GMV processed in the fourth quarter compared with $27.7 billion (51% of GMV) in the year-ago quarter.
Shopify Capital advanced $393.2 million in cash and loans to merchants in the United States, Canada, the U.K. and Australia in the reported quarter, up 21% year over year. Since the launch of Shopify Capital, cumulative merchant cash advances have risen to $4.7 billion, out of which $580.1 million was outstanding as of Dec 31, 2022.
Operating Details
Non-GAAP gross profit increased 16.9% year over year to $818.8 million. However, the gross margin contracted 360 basis points (bps) year over year to 47.2%.
Adjusted sales and marketing expenses, as a percentage of revenues, declined 280 bps year over year to 16.2%. Moreover, adjusted research and development expenses, as a percentage of revenues, increased 500 bps year over year to 19.4%. Adjusted general and administrative expenses increased 10 bps to 6.1%.
Non-GAAP operating expenses increased 32.9% year over year to $757.9 million. Operating expenses, as a percentage of revenues, increased 230 bps to 43.7%.
Shopify’s adjusted operating income declined 53.1% year over year to $61 million.
Balance Sheet
As of Dec 31, 2022, Shopify ended the reported quarter with cash, cash equivalents and marketable securities balance of $5.05 billion compared with $4.9 billion as of Sep 30, 2022.
Guidance
For the first quarter of 2023, Shopify expects revenue growth in the high-teen percentages on a year-over-year basis.
The gross margin is expected to be slightly higher than Shopify’s fourth-quarter 2022 gross margin.
Operating expenses are expected to grow in the low-single-digit percentages on a sequential basis.
Performance of an Industry Player
Shopify belongs to the Internet - Services industry. Another stock from the same industry, Alphabet Inc. has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Alphabet Inc. reported revenues of $63.12 billion in the last reported quarter, representing a year-over-year change of +2%. EPS of $1.05 for the same period compares with $1.53 a year ago.
We can see that SHOP is still competitive in the whole industry!
Comments