Shopify Stock Rises With Better-Than-Expected 2Q, Upbeat Outlook

By Adriano Marchese

Shopify's shares were higher Wednesday after the e-commerce company's quarterly revenue and profit growth outpaced Wall Street estimates as more merchants joined the platform.

Shopify said it expects to reverse slowing sales growth in the third quarter after a drag from divesting its logistics business last year. Shopify now sees increasing revenue in the low-to-mid-twenties percent range in the third quarter. Analysts expected a growth of 21.1% for the period, according to FactSet. The rosier guidance for the third quarter is a reversal from previous forecasts where expectations were for a slowdown in sales growth.

Shares rallied nearly 18% in premarket trading Wednesday to $63.89. The stock was down 27% year to date prior to Tuesday's market close.

The Ottawa-based company, which provides technological infrastructure for online merchants, on Wednesday reported second-quarter revenue of $2.05 billion, up from $1.69 billion, beating analyst expectations of $2.01 billion, according to FactSet.

The company's better-than-expected results come as it navigates shaky consumer spending across the globe and increased competition from other online shopping vendors.

Shopify swung to a second-quarter profit of $170 million, or 13 cents a share, from a loss of $1.3 billion, or $1.02 a share, in the prior-year period. Adjusted earnings were 26 cents a share, higher than the 20 cents a share analysts expected.

More merchants signed on to Shopify's platform, boosting sales for its merchant solutions division to $1.48 billion from $1.25 billion.

Subscription solutions revenue rose to $563 million from $444 million last year after Shopify raised prices for its subscription services earlier this year.

Gross merchandise volume, a key metric that measures the total value of orders processed on Shopify's platform, rose 22% to $67.2 billion.

Gross payments volume climbed to $41.1 billion, representing 61% of GMV it processed in the quarter, compared with $31.7 billion.

Shopify said it expects third-quarter revenue to increase to more than $2 billion. Analysts expect $2.07 billion.

Shopify's optimistic outlook comes as online retailers are reporting a spending slowdown among consumers.

Amazon.com last week projected weaker-than-expected revenue growth for the current quarter and said that customers have been more likely to look for deals and lower-priced essentials when shopping online.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

August 07, 2024 10:06 ET (14:06 GMT)

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