Shopify Improves Net Loss In Q3 2022 But Expects Operating Loss For The Year

Shopify Inc. (TSX: SHOP) reported today its financial results for Q3 2022, generating US$1.37 billion in revenue for the quarter. This is an increase from Q2 2022’s US$$1.3 billion and Q3 2021’s US$1.12 billion.

Revenue for the quarter consisted of US$376.3 million in subscription solutions revenue, up from US$336.2 million last year, as well as US$989.9 in merchant solutions revenue, up from US$787.5 million last quarter.

The “solid quarter” comes after the firm predicted Q3 results to be worse when it reported Q2 2022 results.

“During Q3, merchants continued to recognize Shopify’s exceptional value and increased their adoption of our essential tools and innovative solutions. Our merchant solutions revenue as a percentage of GMV – or Merchant Solutions attach rate – climbed to 2.14%, the highest level in Shopify’s history,” said President Harley Finkelstein.

The firm’s gross profit margin for the quarter is 48.5% compared to 53.8% in the previous quarter and 54.2% in the year-ago period.

However, the company widened its operating loss this quarter–ending at a US$0.35 billion operating loss from last quarter’s US$0.19 billion loss and last year’s US$4.1 million loss.

This trailed down to notching a net loss of US$158.4 million, an improvement from last quarter’s net loss of US$1.20 billion but a significant drop from last year’s net income of US$1.15 billion. This translates to a US$0.12 loss per share.

Excluding a number of financial items, Shopify’s adjusted net loss for Q3 2022 amounted to US$30.0 million, an increase from last quarter’s loss of US$38.5 million but a decrease from last year’s gain of US$102.8 million. The posted adjusted net loss for the quarter translates to US$0.02 loss per diluted share. 

Looking at the balance sheet, the company ended Q2 2021 with approximately US$1.38 billion in cash and cash equivalents and US$3.56 billion in marketable securities. This puts the balance of the current assets at US$6.01 billion while current liabilities ended at US$905.2 million.

The firm also identified its outlook for the rest of 2022, toplined by “Merchant Solutions revenue growth year-over-year [exceeding] more than double that of Subscription Solutions revenue growth for full year 2022.” However, the tech platform still expects operating losses for the remainder of the year.

“Considering all of these expectations, we continue to expect an adjusted operating loss for the full year. For the fourth quarter, based on our updated outlook, we now expect an adjusted operating loss amount that will be fairly comparable to the adjusted operating loss amount in the third quarter,” said the company in a statement.

Shopify Inc. last traded at $46.31 on the TSX.

Information for this briefing was found via Sedar and Shopify. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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