Shopify stock soars over 20% on very strong Q2 report, upbeat guidance

Shopify (NYSE: SHOP) saw its shares soar more than 20% in premarket trading Wednesday after the e-commerce company posted better-than-expected results for the fiscal second quarter and issued upbeat guidance for the current quarter.

The company reported Q2 earnings per share (EPS) of $0.26, beating the consensus projection of $0.20. Revenue came in at $2.05 billion, also above the analyst estimate of $2.01 billion.

Monthly recurring revenue came in at $169 million, marking a 22% year-over-year increase and surpassing the expected $158.9 million.

Merchant Solutions revenue was $1.48 billion, reflecting a 19% year-over-year increase and matching the estimate of $1.48 billion. Subscription revenue surged 27% year-over-year to $563 million, exceeding the projection of $533.2 million.

Shopify reported a gross merchandise volume (GMV) of $67.25 billion, a 22% year-over-year jump, above the estimate of $65.73 billion.

The gross payment volume was $41.10 billion, a 30% year-over-year increase, surpassing the estimate of $39.95 billion.

The adjusted gross margin stood at 51%, compared to 50% year-over-year, slightly below the consensus of 51.1%.

Looking ahead, Shopify anticipates Q3 revenue growth in the low-to-mid-twenties percentage range year-over-year, above consensus expectations for 21% year-over-year growth.

Citi analysts reiterated a Buy rating on the stock after the report's release.

"Against lackluster consumer/e-comm sentiment, SHOP delivered a very solid Q2 with top-line trends continuing to see more resilience vs. peers with GMV growth sustaining low 20s growth (~3 year highs)."

"We expect shares to trade up nicely on stronger than expected top-line results and expectations as well as operating expenses + guide which fared better than feared, which likely alleviates buy-side concerns of elevated sequential opex as % of total revenue."

By Vahid Karaahmetovic

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