Shopify
has posted an earnings beat for the fourth quarter and its guided for growth in 2024, but the shares still fell on Tuesday.
The company which offers services and tools for online selling reported earnings of 51 cents a share for the fourth-quarter, and revenue of $2.14 billion.
Analysts expected the company to post adjusted earnings of 30 cents a share on $2.08 billion, according to
FactSet
consensus estimates.
Gross merchandise volume, or the total value of orders processed on
Shopify’s
platform came to $75.1 billion, up 23% from the same period a year earlier.
The company said that for 2024 overall it expects revenue to grow at a low-twenties percentage rate and free cash flow as a percentage of revenue to be in the high-single digits, improving in each quarter.
Shopify’s U.S.-listed shares were down 3.0% in premarket trading, having risen 78% over the last 12 months.
This is breaking news. Read a preview of Shopify’s earnings below and check back soon for more analysis.
Shopify stock has been on a roll over the past few months as the company executes a reset plan after a postpandemic slowdown in e-commerce.
The company’s fourth-quarter earnings report—due Tuesday morning—will be a welcome update on its progress.
2022 and 2023 were tough years for Shopify as it struggled to adapt to the postpandemic shopping environment. The company announced two rounds of layoffs, affecting about 30% of its staff, and sold off its logistics business.
While painful, the cuts helped put Shopify on better footing in the latter half of the year and into 2024, analysts say. The company has focused on growing its offerings for merchants, such as rolling out a new AI assistant and improving its point-of-sale options for brick and mortar retailers.
Those efforts have started to pay off, writes Loop Capital analyst Anthony Chukumba. In Loop Capital’s latest survey of Shopify merchants, 73% said they were satisfied with Shopify, a nine percentage point increase from a quarter ago. Meanwhile, the number of unsatisfied clients was down five percentage points. The improvements prompted Chukumba, who has a Neutral rating on the stock, to raise his price target on the shares to $82 from $75 in late January.
Citi’s
Tyler Radke also boosted his price target ahead of earnings, even though he maintained a Neutral rating on the stock. The company’s guidance looks conservative given how strong the holiday season turned out to be, Radke wrote in a note last week. Margins could also improve thanks to management’s operational discipline, he added.
Analysts are predicting the company will post adjusted earnings of 30 cents a share on $2.08 billion, according to FactSet consensus estimates. Gross merchandise volume, or the total value of orders processed on Shopify’s platform, is expected to jump 19% to $72.5 billion.
The Street has been tweaking its estimates higher heading into Tuesday morning’s report. Earnings per share estimates have gone up 0.4% over the past week, according to FactSet.
“Our view is that a streamlined Shopify is again poised to overachieve FactSet expectations, and it remains our top pick for 2024,” wrote Todd Coupland, analyst at CIBC, in a note last week. Coupland, who has an Outperform rating on the stock, bumped up his price target to $100 from $82.
Most analysts aren’t as sanguine on the stock, with 54% rating it a Hold, 40% a Buy, and 6% a Sell. Much of the skepticism stems from Shopify’s valuation, which has grown in tandem with the stock’s 83% over the last year.
“We remain on the sidelines and await a better entry point,” Radke wrote.
Write to Sabrina Escobar at [email protected]
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