Personal Finance

Shopify's Torrid Growth Continues

A compass pointing towards the word growth

Shopify (NYSE: SHOP) reported third-quarter results on Oct. 25. The multichannel commerce company's sales once again rose at a greater than 50% clip, as businesses continue to flock to its platform.

Shopify results: The raw numbers

Q3 2018 Q3 2017 Year-Over-Year Change
Revenue $270.06 million $171.46 million 58%
Net loss ($23.18 million) ($9.38 million) N/A
Net loss per share ($0.22) ($0.09) N/A

Data source: Shopify Q3 2018 earnings press release .

What happened with Shopify this quarter?

Gross merchandise volume (GMV) is a key metric for investors to watch as it represents the total value of sales made by all the merchants on Shopify's platform and therefore can be viewed as a measure of the overall health of its businesses. Shopify's GMV surged 55% year over year to $10 billion. "We relentlessly shipped new products and features to prepare our merchants for their biggest selling season of the year, merchants' GMV expansion was well ahead of e-commerce growth overall, and our merchant base continues to expand at a healthy clip," CFO Amy Shapero said in a press release.

In turn, Shopify's subscription revenue jumped 46%, to $120.5 million, including a 41% increase in monthly recurring revenue (the number of merchants times the average subscription fee), to $37.9 million.

Additionally, Shopify's merchant solutions revenue climbed 68% to $149.5 million, boosted by the continued strong growth of Shopify Payments, Shopify Capital, and Shopify Shipping.

A compass pointing towards the word growth

Shopify delivered impressive revenue growth in the third quarter. Image source: Getty Images.

Shopify also delivered an unexpected adjusted profit -- excluding stock-based compensation expense -- of $4.5 million. Management had previously guided for a loss.

However, Shopify remains unprofitable on a GAAP basis . The company generated a net loss of $23.2 million, or $0.22 per share in the third quarter compared to a loss of $9.4 million, or $0.9 per share, in the year-ago period.

Looking forward

Shopify's strong sales results prompted it to lift its full-year financial forecast, which now includes:

  • Revenue of $1.045 billion to $1.055 billion -- up from a previous estimate of $1.015 billion to $1.025 billion -- representing 56% year-over-year growth.
  • A GAAP operating loss of $95 million to $97 million, down from $105 million to $110 million.
  • Adjusted operating profit of $8 million to $10 million versus $0 to $5 million.

Better still, management expects to finish the year on a high note. "We're well positioned to close 2018 and enter 2019 with excellent momentum," Shapero said.

10 stocks we like better than Shopify

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Shopify wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Personal Finance Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More