Shopify Inc

NYSE:SHOP   2:53PM EDT
269.74
-9.26 (-3.32%)

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Shopify Earnings: What Will Move the Market

Shopify Earnings: What Will Move the Market



Shopify Earnings: What Will Move the Market

 
Date Published: 4-18-2019

Disclaimer

The results here are provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation.

LEDE

Shopify has earnings due out on 4-30-2019 before the market opens. The stock has seen a 73% rise over the last year and nearly a 40% rise in the last 3-months to an all-time high. That means expectations are built in, now, for a beat and raise, and the way the market has treated other high flying software companies, it better be a sizeable beat and raise, and it better hit revenue and EPS -- neither metric can be left behind.
 
The e-commerce thematic still has a secular tailwind, but competitors are circling, as one would expect given the success that Shopify has enjoyed. - What could go wrong: Watch for any discussion of disrupted growth due to Square or any mention of Microsoft's semi-official new e-commerce platform.


- What could go right: Look for Subscription Solutions revenue, Merchant Solutions revenue, Gross Merchandise Volume (GMV), and the amount of GMV processed through Shopify Payments. All of these pieces are growing at absurd rates, are expected to slow due to scale, but if they show continued strength generally, yes, Shopify can go higher.

Further, if the Shopify efforts to expand sales through an actual brick and mortar presence continues to work - it is very easy to see that expansion continue for a long, long time.

In the end, Shopify will have to prove yet again that it has outgrown the simplistic view of its company as "that place you build your e-commerce website," to the all encompassing ecosystem that encircles pay, credit/capital, e-commerce, user management and so much more. As of now, Shopify is the undisputed leader.  In order for it to climb yet higher, it must maintain that undisputed lead -- the secular tailwind of e-commerce in general is enough to keep this high flier going, if that lead is held.

Shopify - By the Numbers

There is an expectation set by Wall Street -- and there are numbers at the top tier of that expectation as well. Guidance, at times, moves the market more than the actual quarter being reported -- so watch those numbers as well.


Current Quarter Analyst Estimates

Revenue $ 309.89 million
Adjusted EPS $ -0.05


What Constitutes a "Large Beat" for the Quarter

* If Shopify reports a revenue number above $320 million, that would be ahead of even the highest estimates.
* If Shopify reports an EPS number above $0.02 , that would be ahead of even the highest estimates.

Next Quarter Analyst Estimates (Guidance)

Revenue $ 341.8 million
EPS $ 0.04


What Constitutes a "Large Beat" in Guidance

* If Shopify guides revenue above $ 356.70 million , that would be ahead of even the highest estimates.
* If Shopify guides EPS above $ 0.14 , that would be ahead of even the highest estimates.

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As always, control risk, size appropriately and use your own judgment, aside from anyone else's subjective views, including my own.

Thanks for reading, friends.

The author is long shares of Shopify at the time of this writing.

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