Shopify Jumps 15% After Posting Strong Q3 Revenue Growth

Shopify (NYSE: SHOP) is a major market mover this morning following positive third quarter results released by the company. The company saw total revenue jump 25% over the prior year to $1.7 billion.

The company reported substantial growth across all of its metrics, including gross merchandise volume, which climbed 22% to $56.2 billion, and gross payments volume, which grew to $32.8 billion.

On a segment basis, merchant solutions revenue grew 24% to $1.2 billion, subscription solutions revenue rose 29% to $486 million, and monthly recurring revenue jumped 32% to $141 million.

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Gross profit managed to increase at a rate faster than revenue, with the metric climbing 36% to hit $901 million during the three month period, with gross margin amounting to 52.6%. With operating costs declining to $779 million, Shopify managed to post an income from operations of $122 million, versus a loss in the comparable period of $346 million.

Overall, this translated to net income of $718 million after other income is added to the mix, and resulted in free cash flow of $276 million for the three month period.

And the positive results kept flowing, with Shopify guiding towards full year revenue growth in the mid-20% range, with Q4 revenues expected to grow in the high-teens on a year over year basis. Q4 margins are expected to be 300 to 400 bps higher than the prior years 46.0%, while operating expense dollars will be down on a low single digit percentage basis from Q3. Free cash flow as a percentage of revenue in the fourth quarter is expected to be in the high teens as well.

“Our results showcased the durability of our business model as we delivered a compelling combination of both top line growth and profitability, with revenue growing 25% year over year and free cash flow margin reaching 16%. We will continue to operate with discipline, thoughtfully investing in the huge opportunities ahead across regions, products, and channels to help merchants capture every opportunity every step of the way,” commented CEO Jeff Hoffmeister on the results.

Shopify last traded at $56.47 on the NYSE.

Information for this briefing was found via Sedar and the sources mentioned. 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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