Shopify shares fell 7 per cent on Tuesday after the e-commerce platform's third-quarter results missed analyst estimates on gross merchandise volume and subscription gross profit, despite beating expectations on adjusted earnings.
Shopify reported adjusted earnings of 49 cents per share, topping LSEG estimates of 46 cents, while overall quarterly revenue of $3.74 billion came in just below the $3.75 billion analysts expected. Gross merchandise volume reached $119.15 billion, missing the $120.03 billion forecast, and subscription gross profit of $661 million fell nearly $20 million short of the $680.3 million StreetAccount estimate. Subscription revenue of $836 million also missed the $848.1 million expected, while merchant revenue and merchant gross profit beat estimates.
For the fourth quarter, the company said it sees revenue growth in the “low thirties” range year over year, compared with LSEG estimates of 32.1 per cent.
Shopify president Harley Finkelstein called the GMV results "consistent" and "durable" in comments to CNBC's "Squawk on the Street" on Tuesday, and noted it was the thirteenth consecutive quarter of GMV growth above 20 per cent. "We're really proud of the print, and we're going to keep building for the long term and ignore the noise day to day," he said.
Analysis
Why This Matters
- The missed GMV and subscription revenue figures weighed on the stock despite an earnings beat, showing how closely investors track Shopify's core growth metrics.
- The "low thirties" fourth-quarter guidance is in line with the 32.1 per cent analysts expected, leaving little room for upside.
- Shopify's results offer a snapshot of online commerce demand among the small and mid-sized merchants that make up much of its base.
Background
Shopify is a Canadian e-commerce platform whose software lets merchants build online stores. Its gross merchandise volume, the dollar value of goods sold through the platform, is a closely watched gauge of demand for its services.
What to Watch
- Shopify's fourth-quarter revenue growth, guided to the "low thirties" per cent year over year.
- Whether the streak of gross merchandise volume growth above 20 per cent extends beyond thirteen quarters.
- The share price reaction in the sessions after Tuesday's 7 per cent fall.
Checked
10 claims in this story checked against 1 source: 9 supported.
Show each claim
- SupportedShopify shares fell 7% on Tuesday.US Top News and Analysis: “Shares of e-commerce platform Shopify fell 7% on Tuesday after the company missed estimates on subscription gross profit and gross merchandise volume.”
- SupportedShopify missed analyst estimates for gross merchandise volume.US Top News and Analysis: “Gross merchandise volume, which came in at $119.15 billion, missed analyst estimates of $120.03 billion for the quarter, according to StreetAccount.”
- SupportedShopify missed estimates for subscription gross profit.US Top News and Analysis: “Subscription gross profit also missed estimates by nearly $20 million, coming in at $661 million compared to StreetAccount estimates of $680.3 million.”
- SupportedAdjusted earnings of 49 cents per share topped estimates of 46 cents.US Top News and Analysis: “Shopify reported before the bell Tuesday and posted adjusted earnings of 49 cents per share, topping LSEG estimates of 46 cents per share.”
- Partly supportedShopify guided to “low thirties” fourth-quarter growth.US Top News and Analysis: “Shopify said it sees revenue growth in the "low thirties" range year over year for the fourth quarter, versus LSEG estimates of 32.1%.”
- SupportedSubscription revenue of $836 million missed the $848.1 million estimate.US Top News and Analysis: “Subscription revenue of $836 million also missed analyst estimates of $848.1 million, according to FactSet.”
- SupportedQuarterly revenue of $3.74 billion came in just below the $3.75 billion estimate.US Top News and Analysis: “Overall, quarterly revenue of $3.74 billion came in just below LSEG estimates of $3.75 billion.”
- SupportedHarley Finkelstein called the GMV results “consistent” and “durable” in comments to CNBC’s “Squawk on the Street” on Tuesday.US Top News and Analysis: “Shopify president Harley Finkelstein called the GMV results "consistent" and "durable" in comments to CNBC's "Squawk on the Street" on Tuesday,”
- SupportedFinkelstein said, “We're really proud of the print, and we're going to keep building for the long term and ignore the noise day to day.”US Top News and Analysis: “"We're really proud of the print, and we're going to keep building for the long term and ignore the noise day to day," Finkelstein said.”
- SupportedFinkelstein noted that it was the thirteenth consecutive quarter of GMV growth above 20%.US Top News and Analysis: “and noted it was the thirteenth consecutive quarter of GMV growth above 20%.”
