Technology
Thursday, November 2nd, 2023 1:51 pm EDT
Key Points
- Strong Financial Results: Shopify’s stock surged by over 15% after the company reported better-than-expected third-quarter results. It exceeded consensus expectations with adjusted earnings per share of 24 cents (compared to an expected 14 cents) and revenue of $1.71 billion (surpassing the anticipated $1.67 billion).
- Positive Outlook for 2023: Shopify has a positive outlook for 2023, with expectations of mid-twenties percentage revenue growth on a year-over-year basis. This growth is expected to be driven by high teens revenue growth in the fourth quarter.
- Impressive Metrics and Strategic Moves: During the quarter, Shopify achieved a 22% increase in Gross Merchandise Volume (GMV), reaching $56.2 billion. The company’s CFO highlighted the durability of its business model, with 25% year-over-year revenue growth and a 16% free cash flow margin. Shopify also made strategic moves, including a partnership with Amazon to offer fast and free Prime delivery to its merchants and an investment in the online marketplace Faire, establishing it as the recommended wholesale platform for Shopify merchants.
Shopify’s stock surged more than 15% after the company reported third-quarter results that exceeded expectations and provided a strong forecast for the rest of the year. In the quarter, Shopify outperformed expectations in several key areas:
- Earnings per share (adjusted): 24 cents, surpassing the expected 14 cents.
- Revenue: $1.71 billion, beating the expected $1.67 billion.
Shopify anticipates its 2023 revenue to grow at a mid-twenties percentage rate year-over-year, driven by strong fourth-quarter revenue growth in the high teens. Gross merchandise volume (GMV), representing the total value of goods sold on the platform, increased by 22% to $56.2 billion during the quarter, exceeding analyst predictions of $54.2 billion in GMV.
The company’s CFO, Jeff Hoffmeister, highlighted the durability of Shopify’s business model, with revenue growing 25% year-over-year and a free cash flow margin reaching 16%. Shopify has maintained a focus on cost management, which included a workforce reduction of 20% in May and the divestment of its logistics unit to Flexport, a supply chain software startup. This sale included Deliverr, a last-mile delivery company that Shopify had acquired for $2.1 billion in the previous year.
Shopify also made strategic moves during the quarter, including a partnership with Amazon that allows its merchants to offer fast and free Prime delivery on their non-Amazon storefronts. Additionally, the company invested in the online marketplace Faire, making it the recommended wholesale platform for Shopify merchants. These initiatives have contributed to Shopify’s positive financial performance and outlook.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/02/shopify-shop-earnings-q3-2023.html
