Shopify Inc. (TSX: SHOP) has announced robust financial results for the fourth quarter of 2023, surpassing analyst expectations but witnessing a notable decline in its U.S.-listed stock. The company reported a quarterly profit and revenue that exceeded estimates, while also providing a positive outlook for the upcoming year.
According to the financial report released by Shopify, the multinational e-commerce company saw a significant turnaround, swinging to a profit of $657 million, or 51 cents a share, compared with a loss of $623.7 million or 49 cents a share, a year earlier. Adjusted earnings were reported at 34 cents a share, surpassing analysts’ expectations of 30 cents a share, as per FactSet data.
The revenue for the quarter topped expectations, reaching $2.14 billion, attributed mainly to an increase in the volume of products sold through its platform. This marks a 24% increase from the same period last year. Additionally, Shopify revealed that its merchants achieved record sales of $9.3 billion over the Black Friday-Cyber Monday weekend, indicating a 24% increase from the previous year.
Despite the strong financial performance, Shopify’s U.S.-listed stock witnessed a decline of more than 8% in premarket trading following the release of the results. Similarly, the company’s U.S.-listed shares, which had experienced substantial growth in the previous year, fell nearly 8% in trading before the bell.
Analyst Gil Luria from D.A. Davidson commented on the results, stating, “Shopify reported a strong quarter and exceeded revenue growth expectations. While guidance for the first quarter was also healthy, it may not be enough given high investor expectations.”
Looking ahead, Shopify provided optimistic guidance, expecting revenue to grow at a low-twenties percentage rate on a year-over-year basis from the $7.06 billion generated across 2023. The company’s President, Harley Finkelstein, expressed enthusiasm about the future, highlighting the progress made in building software for merchants of all sizes.
Harley Finkelstein stated, “2023 was an incredible year for both Shopify and our merchants. Our strong Q4 and annual results are a powerful testament to the progress we have made building fast, reliable, and unified software for merchants of all sizes.”
Similarly, Jeff Hoffmeister, Chief Financial Officer of Shopify, emphasized the company’s financial achievements and its plans for the future. Hoffmeister stated, “Our GMV growth accelerated in Q4 and for all of 2023, which powered Shopify’s strong financial results. For 2024, we look to build on the momentum that we achieved in 2023 and continue to deliver a strong combination of both top-line growth and profitability.”
The fourth-quarter financial highlights revealed a 23% increase in Gross Merchandise Volume (GMV) to $75.1 billion, along with a 24% revenue increase to $2.1 billion compared to the prior year. Merchant Solutions revenue increased by 21% to $1.6 billion, primarily driven by the growth of GMV and continued penetration of Shopify Payments. Additionally, Subscription Solutions revenue increased by 31% to $525 million compared to the previous year.
For the full year of 2023, Shopify reported a 20% increase in Gross Merchandise Volume to $235.9 billion and a 26% increase in total revenue to $7.1 billion compared to 2022.
Looking ahead to 2024, Shopify anticipates revenue to grow at a low-twenties percentage rate on a year-over-year basis, with a focus on increasing gross margin and operating expenses. The company expects stock-based compensation to be approximately $105 million and capital expenditures to be approximately $10 million for the first quarter of 2024.
Shopify last traded at $89.12 on the TSX.
Information for this briefing was found via Reuters, The Wall Street Journal, 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.
