- Shopify stock (NYSE/TSX:SHOP) is down by 4.08 per cent in pre-market U.S. trading after positive Q2 results
- Total revenue increased 31 per cent to US$1.7 billion YoY
- Operating loss was US$1.6 billion, including US$1.7 billion in one-time items related to the sale of Shopify’s logistics businesses
- Shopify is a leading global e-commerce company powering millions of businesses in more than 175 countries
- Shopify stock (TSX:SHOP) last traded on the TSX at $83.39 per share
Shopify stock (NYSE/TSX:SHOP) is down by 4.08 per cent in pre-market U.S. trading after positive Q2 results.
Q2 financial highlights
- Gross merchandise volume (GMV) increased 17 per cent to US$55 billion, an increase of US$8.2 billion over Q2 2022, up 18 per cent on a constant currency basis
- Total revenue increased 31 per cent to US$1.7 billion YoY, up 31 per cent on a constant currency basis
- Merchant solutions revenue increased 35 per cent to US$1.3 billion YoY driven by the growth of GMV and continued expansion of Shopify Payments
- Gross payments volume grew to US$31.7 billion, representing 58 per cent of GMV processed in Q2, versus US$24.9 billion, or 53 per cent YoY
- Subscription solutions revenue increased 21 per cent to US$444 million YoY because of increased merchants and pricing changes that went into effect for existing merchants in April
- Monthly recurring revenue (MRR) as of June 30, 2023 increased 30 per cent to US$139 million YoY. Gains were driven primarily by the pricing changes that went into effect in April and continued growth in Standard and Plus merchants. Shopify Plus contributed US$41 million, or 29 per cent, of MRR compared with 31 per cent as of June 30, 2022
- Gross profit grew 27 per cent to US$835 million YoY. Gross margin was 49.3 per cent compared to 50.7 per cent YoY, driven by a higher mix of revenue from the lower-margin Merchant Solutions segment, primarily from the lower-margin revenue contributions from Deliverr
- Operating loss was US$1.6 billion, including US$1.7 billion in one-time items from impairment and acceleration of stock-based compensation related to the sale of Shopify’s logistics businesses, as well as severance
- Adjusted operating income was US$146 million, or 9 per cent of revenue, compared with US$42 million or 3 per cent of revenue YoY. The difference reflects higher revenue as well as lower adjusted operating expenses
- Capital expenditures were US$21 million compared to US$12 million YoY
- Free cash flow was US$97 million or 6 per cent of revenue, compared with negative free cash flow of US$87 million or 7 per cent of revenue YoY. The company was cash flow positive for the third consecutive quarter
- Cash and marketable securities stood at US$4.8 billion as of June 30, 2023, with a net cash position of US$3.9 billion. This is in addition to US$719 million in loans receivables and merchant cash advances outstanding on June 30, 2023
Business highlights
On July 26, Shopify released its semi-annual product and innovation showcase, which was highlighted by:
- Shopify Magic, a suite of AI-enabled features integrated across the Shopify platform to make it easier for merchants to run their businesses
- Sidekick, an AI-enabled commerce assistant that allows merchants to use AI to increase productivity, improve workflows, make smarter decisions and spend less time on operational tasks
- Shopify Collective, a solution that enables merchants to source products from other brands on Shopify and have them shipped directly to their customers
- Shopify Marketplace Connect app, a centralized hub for merchants to sell on all major marketplaces, including Amazon, eBay and Walmart, while managing and fulfilling orders through Shopify
- Shopify Credit, a pay-in-full business credit card exclusively for Shopify merchants with cash-back rewards
Expectations for Q3
- Revenue growth at a low-20s percentage rate on a YoY basis, leading to a YoY growth rate in the mid-20s
- Gross margin 2-3 per cent higher than Q2 2023’s figure of 49.3 per cent
- Flat to slightly elevated operating expense dollars compared with Q2 2023
- Stock-based compensation of US$110 million
- Capital expenditures of US$45 million for the full year, including US$33 million in the first half of the year related to the sale of the company’s logistics businesses
- Free cash flow profitability for Q3 2023 to be greater than the entire first half of 2023
- A revenue growth headwind of 3-4 per cent YoY and a gross margin tailwind of 3-4 per cent YoY related to the sale of its logistics businesses
“Our business momentum has led to another quarter of strong financial results. We’re not just shipping products faster, but we are also expanding our global merchant base, all while improving our ability to generate greater free cash flow,” Harley Finkelstein, president of Shopify, said in a statement. “As we lean into the new shape of Shopify, our focus remains on building the world’s best product to empower entrepreneurs and businesses everywhere.”
Shopify is a leading global e-commerce company providing essential internet infrastructure to start, scale, market and run a retail business of any size. The company powers millions of businesses in more than 175 countries.
Shopify stock (TSX:SHOP) last traded on the TSX at $83.39 per share.
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