Shop (SHOP) shares soared Wednesday after the e-commerce company reported second-quarter earnings and revenue that beat estimates amid strong growth in its subscription business. The outlook for Shopify shares came in above expectations.
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Today, Shopify shares rose 23.5% on the stock market to 66.97 in early trading.
“Operating margin stole the show, easily beating consensus,” Jefferies analyst Samad Samana said in a report. “The Q3 outlook for growth and margins was also better than expected. Shopify’s Q2 showed that the topline is more resilient than feared and management is more committed to margin expansion than expected.”
Shopify’s profit for the quarter ended June 30, released before the market open, was 26 cents on an adjusted basis, and revenue also rose 21% to $2 billion.
Shopify analysts surveyed by Factset forecast a profit of 20 cents on revenue of $1.996 billion.
Additionally, Shopify reported that gross merchandise volume from merchant transactions increased 22% in the second quarter to $67.2 billion, compared to estimates of $65.34 billion.
Subscription Company A bright spot
Merchant Solutions revenue rose 19% to $1.5 billion, compared with estimates of $1.47 billion. Subscription revenue rose 27% to $563 million, compared with estimates of $529 million. Shopify recently raised prices for premium services aimed at larger businesses.
Ahead of Shopify’s earnings report, shares had fallen 27% in 2024.
For the current quarter, September, Shopify expects “revenue to grow at a rate of low to mid-20s percent year-over-year.” For the third quarter, analysts estimate revenue at $2.057 billion.
Shopify Stock: Technical Reviews
In 2023, the company sold its delivery and logistics operations to Flexport, easing Wall Street’s concerns about rising capital spending.
Additionally, Shopify sets up ecommerce websites for small businesses and partners with others to process digital payments and shipping.
Meanwhile, Shopify stock has a Relative Strength Rating of 13 out of a possible 99, according to IBD Stock Check-up.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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