Shopify Inc. Q4 Shares Rise As Earnings Beat The Street, Forecast Above View
Written by StockNews.com
Shopify Inc. (NYSE:SHOP) early Wednesday [Feb 15, 2017 | 7:08am] posted better-than-expected fourth quarter earnings and offered an upbeat outlook for 2017, as customers continued to flock to its cloud based services.
The Ottawa, Ontario, Canada-based cloud commerce platform provider reported Q4 break-even EPS, which was $0.02 better than the Wall Street consensus estimate for a net loss of ($0.02).
Revenues surged 85.8% from last year to $130.4 million, easily topping analysts’ $121.67 million view.
Shopify said that Subscription Solutions revenue rose 63% to $56.4 million, helped by major growth in Monthly Recurring Revenue (MRR). MRR as of the end of 2016 was $18.5 million, up 63% from the year-ago period.
Merchant Solutions revenue surged 108% to $74.0 million on strong Gross Merchandise Volume (GMV). GMV for the fourth quarter was $5.5 billion, an increase of 94% over the fourth quarter of 2015.
The total number of merchants on the Shopify platform eclipsed 375,000 in the fourth quarter, with a record number of merchants joining the platform for the first time.
Looking ahead SHOP forecast Q1 revenues ranging from $120 to $122 million, which is above the average Wall Street estimate of $117.1 million.
For the full year 2017, Shopify expects revenues of $580 to $600 million, also ahead of analysts’ $562.93 million view.
The company commented via press release:
“That we grew revenue by 90% and GMV by 99% for the full year 2016 speaks to the enormous opportunity in retail right now and our strategic position within it,” commented Russ Jones, Shopify’s CFO. “Throughout 2017 we will continue to build out our ability to seize this opportunity by expanding not only our existing features, such as channels, payments, shipping and capital, but also our facilities and infrastructure. These investments are timely, as we expect the number of merchants on Shopify to continue expanding rapidly and their collective sales volumes to continue to grow at a rate several times that of overall retail.”
...Year-to-date, SHOP has gained 30.74%, versus a 4.55% rise in the benchmark S&P 500 index during the same period.
SHOP currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #1 of 32 stocks in the Internet – Services category.
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I am more optimistic than Abdullah about the near term prospects for Shopify.
A growth stock penetrating analyst expectations is one to keep an eye on. However, do not let the numbers fool you. Considering the stock price, I believe that the company is stable enough at this point. Nonetheless, we can expect a dip in stock prices shortly before stabilizing.
It may be important to consider the composition of sales, especially since the US Dollar has been losing value, this may have an adverse effect on revenue as well as stock price. $SHOP
Thanks for the analysis Abdullah. Lorimer, do you agree?
Yes, would love to hear the author's response.